Obtaining Favorable Loans With Bad Credit

Your credit score (also known as FICO) is the most influential factor of your loan application approval. Even if you are an individual with poor credit, there are things you can do prior to applying for a personal loan that may help yourself and your credit score/rating so that lenders will consider you a more prime borrower.

Pay Down Balances
Since about 30% of your FICO score is determined by credit utilization ratio (your balances compared to your available limits). One of the fastest means for raising your credit score is to pay your balances down. Set small goals for yourself. Look to achieve a credit utilization of 50% on all your cards and then work down from there. But make sure you pay off your highest interest cards first. Remember, the lower you maintain your balances, the better your credit score is going to be.

Be Timely With Your Payments
Your payment history is also a key variable as to whether or not approval will be achieved. This deals with how you pay your bills...on time? in full?

A late payment is going to stay on your credit profile for seven years. However, as time goes by, the impact of this late payment on your credit score will gradually fade out -- that is as long as you continue to pay your bills on time every month.

In reality, after six months of a positive payment history, your credit score should slowly improve. And after one years time, you will likely witness an even greater rise.

Don't Open Any New Account of Credit
The number of times you apply for new types of credit makes up about 10% of your total credit score. Therefore, if you are considering applying for a personal loan in the near future, do not apply for a credit card. You don't want lenders to think you are going on some sort of credit bender.

Obtain a Copy of Your Credit Report
Before applying for an unsecured personal loan, it is a very good idea to get a copy of your credit report. The U.S. Public Interest Research Groups reported that over 75% of credit reports have at least one error, some critical enough to equate to a loan denial.

Basic mistakes and errors like misspelled names and/or addresses can be fixed over the phone or the Internet. However, there are going to be issues that are going to be more difficult for your to fix...like accounts that have been closed being reported as opened, or even worse, accounts that have been opened fraudulently in your name. For resolving these types of difficult errors, you'll want to create a paper trail by sending a certified letter with return receipt to the creditor as well as the bureau that is reporting the info. By law, the bureaus has 45 days to review your claim upon receipt.

In Conclusion...
Following the steps above should help with improving credit. However, most people looking to apply for a loan are not planning months in advance and therefore do not have the time needed to follow the steps above. We work with several online lenders that accommodate exclusively towards consumers with poor credit. These providers are going to analyze more than just your credit score and have more flexible requirements than most traditional banks and lenders do. However, it is important to understand that your credit score and history are still going to be taken into account when determining whether or not to extend financing to you. And while we do help people of all credit types, we can not help everyone and do not guarantee to able to.