Sub-prime credit may be an obstacle to your financial freedom, but it is by no means an insurmountable one. Credit scores are three-digit numbers that provide a simple way for you and lenders to determine your “creditworthiness.” They take things like how many credit accounts you have, how many are in good standing, how much total debt dollars you have, and how many late payments or cancelled accounts you have. There are some things you can do to improve your chances at getting a personal loan, even if you have a poor, less than stellar credit score.
Pay off what you can, when you can.
Your past payment record can determine up to 35% of your credit score, so improvements in your payment record can make a big jump in your credit score. You can also choose to include a small, 100-word statement in your credit report to lenders; this is an especially good idea if your credit took a hit due to a temporary loss of job, serious illness, or other extenuating circumstance. In fact, some lenders are more willing to take these kinds of situations under consideration, and some may be willing to cut you slack to help you get back on your feet. At the very least, lenders will see that you are paying attention to how your credit report looks, and that can only be a good thing!
Try credit unions first.
Credit unions function in must the same way as banks; the difference is that credit unions are nonprofit organizations with legally-mandated missions to serve specific, local communities. These two factors allow them to be more flexible and understanding when it comes to borrowers with less than great credit. You may have to qualify to join a credit union, but generally, most people can qualify for one or another, based on your place of residence, occupation, or family affiliation.
It may seem scary, but having a plan to offer collateral can improve the odds of your approval for a personal loan. However, only choose this if you are determined to make all your payments on time. If you fall behind, or worse, enter default on the loan, you will lose whatever property you put up for collateral.
Land a creditworthy co-signer.
Family and close friends are most likely to be willing to help you get back on your feet, but be warned: if you default on your loan, your co-signer will be on the hook with the lender for repayment. It is this exact eventuality that makes some family members and friends less likely to agree to such a situation. Make sure to be plain that you have no intention of falling behind or into default, and do everything you can to keep all your promises to both your lender and your co-signer.
Try peer-to-peer lending.
This option is viable for some, and for the most part, you never know until you try. With peer-to-peer lending, you create an online profile where you can detail your financial circumstances, background information, and reasons for needing the loan.
While these are not the only options available for someone with not-so-fantastic credit, they are some of the simplest and easiest to work with. And don’t forget, if you need a personal loan, we here at Wise Loan are ready to work with you.