How can I get a Personal Loan if I have a low Credit score?
Consumers that have a low Credit score cannot get approved for personal loans because your credit score is the primary requirement for lenders. The solution is to repair, and credit build your credit file to specifically meet bank qualifications to get approved. This can be achieved by deleting negative items and adding positive lines of credit on your file. These credit building techniques can be expedited by adding authorized or primary trade lines to your credit report while organically building your credit score using credit cards and lines of credit that must be paid on time consistently.
Our credit expert analysis will review your file and create a blueprint to increase your credit score so that it specifically meets the banks requirements. Getting approved for a personal loan depends on the requirements that vary for each lender. The key to getting approved is knowing what the requirements are before submitting your application. Our credit experts will update you on which lending institutions are offering special programs in which your credit file is eligible for. For example, a bank may only require a positive credit score threshold, proof of income and your identity opposed to a lender that needs collateral, debt to income ratio, tax returns and bank statements which will be the difference in getting approved or denied.
BASIC REQUIREMENTS FOR FINANCIAL LENDING
Credit Score and History
A positive credit score is one of the most important factors when lenders appraise loan applications. Most banks require a minimum credit score of 680 and base your approval on payment history, amount of outstanding debt and credit history longevity.
Income
Lenders look for borrowers who have the means to repay a new loan so there requirements will be based on the applicant making a certain amount of money annually. Minimum income requirements vary by lender so you want to know what they require before applying.
Items needed for income verification:
Recent tax returns, monthly bank statements, pay stubs and a letter from your employer. If you are self-employed tax returns or bank deposits are required.
Debt-to-income Ratio
Debt-to-income Ratio is the percentage that shows the amount of a borrower’s gross monthly income going towards debt owed. There is a percentage threshold which is normally less than 36% and shows your ability to pay back the loan.
COLLATERAL
When applying for a secured personal loan a lender will require you to show valuable assets which could be a home, vehicles, bank accounts, investments, jewelry etc.
Personal Loan Documents
These documents include your identity, place of residence and employment.
ITEMS NECESSARY FOR PROOF OF IDENTITY
- Driver’s license
- Second state-issued ID
- Passport
- Citizenship Certification
- Birth certificate
- Military ID
- Employer and Income Verification
- Paystubs
- Tax returns
- W-2s and 1099s
- Bank statements
- Contact information for Employer
SELF EMPLOYED
- bank statements
- 1099 forms
- income tax returns.
- Proof of Address
In addition to confirming your employment, most lenders want to know that you have a stable living situation. This may involve providing proof of your address, including a recent utility bill, a copy of your lease or other rental agreement, voter registration card or proof of home, rental or auto insurance that lists your address.
What to do if Denied for credit?
If your personal loan application is denied you can improve your chances of getting approved for personal loans in the future:
- Find out why your application was denied
- Check application for mistakes or inaccuracies
- Improve your credit score
- Get negative items removed
- Show more income
- Find lenders that have requirements you can meet
- Apply for a smaller loan amounts
Each lender has its own minimum requirements and it is important to know the qualifications before applying which will enable you to get approved. Our credit experts will show you how to increase your credit score and notify you about banks that have special programs and qualifications you can meet.