One of the greatest myths in the lending world is that getting rejected for one personal loan is a death sentence that spells rejection for all other loan applications. Especially in the case of those with bad credit, personal loan rejection can seem like an inevitable fate. Yet that is often not actually the case. Contrary to popular belief, lending decisions are not made based on credit scores alone. Therefore, it is essential to understand exactly what factors are at play in a personal loan application and how the reality of your bad credit can play out given different scenarios.
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Make a Little Change
Oftentimes the reason for personal loan rejection is based on elements other than credit. It is possible to get this kind of loan as long as you meet all other criteria for that loan. However, that may mean making alterations to your current loan application in order to compensate for your bad credit score.
In many cases asking for less money can help you to get the loan you need. You also want to make sure that you scrutinize your credit report to make sure that the score that the lender is receiving is accurate and not a result of stolen identity or a clerical error. You also need to make sure that you meet the basic criteria for the personal loan you are asking for, which means reviewing each lender's application carefully and providing all the information required.
Basic Requirements You Will Need
Though each lender's requirements for a personal loan will vary somewhat, there are a few hard and fast rules you need to know. As long as you meet all of these basic requirements it is likely that you can find a personal loan from someone.
• You need to be at least 18, a legal adult, to get a loan without a cosigner.
• You need to have a stable source of income that is sufficient to cover the monthly loan payment you will owe. With bad credit, income is even more essential.
• You need to be a U.S. citizen or qualified non-citizen. The requirements for citizenship will be clearly articulated in each loan application. You also need to prove your citizenship status.
If you find that you are lacking in one of these categories, chances are that your loan application was denied based on these factors, not your poor credit history. There are ways to get around the first two requirements if you can find a cosigner.
Why Credit Matters
Though many lenders will still offer you some sort of personal loan with bad credit, it is a mistake to think that credit scores are completely superfluous. They do matter when it comes to two aspects of your persona loan: the amount offered and interest rates.
With bad credit, getting a personal loan of a substantial amount, such as $25,000 is not really possible. However, you may be able to attain a loan of $5,000 or even $10,000 depending on your income. Make sure your expectations are realistic. Second, though interest rates are at historic lows, your bad credit will impact the rates offered to you. Be prepared to pay interest rates quite a few points higher than average, again according to just how bad your credit score is when you get your loan.
There Is Hope for Bad Credit
Do not assume that just because you have bad credit a personal loan application will be denied or continue to be denied. There is hope that you can get a personal loan with bad credit as long as you look at the other factors involved and make sure you meet them.
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