If you have bad credit, you may find it challenging to get approved for a loan when you need it. Traditional lenders often have strict credit requirements that can make it difficult for people with low credit scores to qualify for financing. However, the rise of online lending has made it easier for people with bad credit to access the funds they need.
Yet, this doesn’t mean that these bad credit loans are freely available for everyone. Here, we cover who bad credit loans are for, the persons who will find it difficult to access them, the requirements you need to fulfill to enjoy them, and the tips for getting approval for your loan applications. You’ll also discover proven steps to find out your online loans for bad credit from WeLoans, a reputable online loan broker.
Who Can Get Bad Credit Loans?
A wide range of people can access bad credit loans with WeLoans, but those that are more likely to secure them include:
- Persons With Low Credit Scores: Bad credit lenders generally have more lenient credit requirements and are willing to work with borrowers with lower credit scores. A “low credit score,” in this sense, should be between 350 and 600. Note that anything below this range would most likely not qualify for any loans.
- Small Business Owners: Self-employed persons who may have difficulty providing proof of income usually find it hard getting approved for a traditional loan. Bad credit loans can help solve this.
- Persons with Limited Credit History: If you just started building your credit history, you may not have enough credit scores to qualify for traditional loans. Again, bad credit loans can come to the rescue.
Tips for Getting Approved for Online Loans for Bad Credit
What can you do to increase your chances of getting approved when you apply for a bad credit loan? We offer some actionable advice below:
Don’t Apply for Multiple Loans at Once
Industry experts, including an expert financial writer called Eric Bank at WeLoans, advises that you don’t apply multiple times for a bad credit loan if you want to increase your chances of getting approved. This is because each time you apply for a loan, the lender will likely perform a hard credit inquiry, which can temporarily lower your credit score.
If you apply for multiple loans within a short period of time, it can make you appear desperate for credit and may cause lenders to view you as a higher risk borrower.
Choose the Right Loan Type
The loan type you’re applying for may affect your approval chances. Different types of loans have different eligibility requirements, terms, and interest rates, and choosing the wrong type of loan could make it harder to get approved or result in higher costs in the long run.
For example, some lenders may be more willing to lend to people with bad credit if they offer a secured loan, which is backed by collateral like a car or a house. This reduces the lender’s risk and may result in a lower interest rate for you.
So, if you’re applying for an unsecured loan with such a lender, you may find it difficult to get approved.
Provide Collateral or a Co-Signer
You can significantly increase your chances of being offered a loan if you offer a collateral like your car or home. While that may appear extreme, you can consider getting a co-signer. This co-signer may be a friend or family member with good credit. Including them in the application may increase your approval chances.
Use a Service like WeLoans
Sieving through different lenders to get the best offers can be tiring. And even after getting potential lenders, the application can be another challenge. WeLoans provides a one-platform-solves-all service that enables you to search through offers across different lenders, compare terms, apply, and get approved from the same portal.
Read Also: Getting a No Guarantor Loan with Bad Credit
What are the Basic Requirements to Get a Basic Bad Credit Loan?
Now that you know the people who can qualify for a bad credit loan, and those who can’t, it is best to know the requirements you need to fulfill to get approval:
Steady Source of Income
Most bad credit lenders require borrowers to have a steady source of income in order to qualify for a loan. This is because a steady income source better enables them to make regular repayments. The said income can come from anywhere – a job, self-employment, regular rental or investment returns, etc.
Proof of Income
Beyond having an income source, you must be able to prove it. This will typically require you to submit documentation like payslips, tax returns, bank statements, etc.
An Active Checking Account
Bad credit lenders often require borrowers to have a valid checking or other forms of accounts to receive loan funds and from where they will make repayments.
Proof of Identity
Don’t be surprised to see your preferred lender asking for a document to prove your identity, especially a government-issued ID. Bad credit lenders want to prevent fraud or the chances of issuing loans to someone who may not be able to repay.
While bad credit loans may come with higher interest rates and fees, they can provide access to the funds you need when traditional lenders may not be an option. However, you need to do the right things to get approved, as we have enumerated above.