How to Increase Your Loan Chances with Bad Credit

If you need a loan and have bad credit, your chances of being approved for quick cash with decent terms are slim. There are steps you can gradually take to increase your chances of getting a loan though.

Get a Copy of Your Credit Report

Your first step in obtaining a loan with good or bad credit is to obtain a copy of your credit report three to six months before applying for a loan. Once you have it, you will know exactly what your potential lenders will see and be prepared to discuss anything in your favor.

Look over your credit report for any inaccuracies and dispute them with the three major credit agencies. This will not increase your scores dramatically, but it can help remove some negative information.

You can get your credit reports free if you have been denied credit recently or by going to AnnualCreditReport.com. Some banks also offer a free credit report monitoring service and credit score checks.

Pay Your Bills on Time

Start mending any negativity on your credit report by paying your bills on time. The earlier you do this, the better your chances are to show the lender you are on the responsible path. If you are having trouble paying on a particular date, contact the creditor. Many times, they can change your due date.

Get a Cosigner

If you have applied and the lender tells you that you aren’t eligible on your own, see if you can apply with an eligible cosigner. A cosigner is seen as your security for the lender. The cosigner promises to pay any outstanding loans on your behalf should you default.

If you find a cosigner, be respectful of your business relationship. They are putting their credit on the line for you. Also, think twice about who you ask. Some relationships have ended sour because of financial situations.

Request the Minimum Amount

Lenders are skeptical of loaning out money to someone with a bad credit history. If it appears you are not being responsible paying back your current debt, it’s risky for them to lend you additional money.

So instead of requesting a large amount, take baby steps and apply for the least amount possible to be approved. The lower the risk, the more they may be willing to give you a chance if you have been clearing up your past debt and proving you can manage your money now. Try to take a payday loan to make up the additional money you need.