Research shows that nearly 55% of Americans are turned down for a loan due to poor credit history.
If your credit score is less than stellar, take heart. Around 30% of Americans have a number that’s less than 601, the mark that distinguishes bad credit from fair credit.
That doesn’t mean you can’t get access to the lending opportunities you need. Today, we’re sharing a quick insider guide to bad credit finance resources, so you can rest assured that there’s nothing holding you back.
First, Understand Your Credit
Before you assume that your credit score is poor and destined to hold you back, first take the time to comb through your credit report.
By law, you’re allowed free access to one credit report per year from each of the three main reporting bureaus, including:
If your score is surprisingly low, there could be errors in your report. If anything looks amiss (e.g. an open credit card you didn’t apply for), then report these mistakes to the credit agency. If the issue is legitimate, your score could improve.
Add a Co-Signer
While not every lender will allow you to add a co-signer, it’s worth your time to find one that will.
Why does this matter?
If you can find a friend or family member whose credit history and income is stronger and more reliable than yours, attaching their name to your loan could help you get approved. While this can be a viable option, keep in mind that it isn’t without its risks.
If you’re unable to pay back the loan, your co-signer will be left footing the bill. There’s no quicker way to sour a relationship than to leave someone with a sky-high bill when they were just trying to help.
To avoid conflict down the road, make sure to get clear terms in writing so everyone is crystal clear on what to expect. Take the time to learn more about this process before asking anyone to sign on the bottom line.
Consider Secured Personal Loans
In some cases, you can find a secured loan that offers better and easier terms than an unsecured one. With a secured loan, you’ll be required to put up some form of collateral before getting access to the funds you need.
For instance, you may pledge your vehicle, your savings account or even your home. These lenders are usually less likely to check your credit score, but make sure you understand all of the fine print. If you default on the loan or fail to make your payments on time, your lender can seize these personal items, so make sure your repayment plan is manageable before moving forward.
We make it easy to put up your car title as collateral with our simple title loan process. After you complete our quick online application, you could be eligible to receive a loan valued at $200 to $50,000 for any year, make or model of your car, truck, or motorcycle.
Lower Your Debt-to-Income Ratio
Most lenders will look at more than just your credit score to gauge your ability to pay back your loan in a timely manner. Many times, they’ll also look at your debt-to-income ratio (DTI).
In short, this is the amount of portion of your monthly income that you apply toward paying down your debts. If your DTI is higher than 50%, you could run into hesitation from lenders. If the loan isn’t time-sensitive, try to pay down more of your debt before you apply.
This could lower your DTI and make a major difference to lenders. At the same time, lowering your debts also helps reduce your credit utilization rate. This number signifies how much of your available credit you’re currently using, and is another number your lender will consider.
Find the Right Lender
In years past, traditional banks and credit unions were your only option when you needed a loan. Today, however, there are more options than ever before, with fewer hoops to jump through.
As you do your research, compare rates and terms from online lenders with those you receive from brick-and-mortar institutions. There are some online lenders who offer personal loans that are specially designed for borrowers with bad credit. While your interest rates might be higher with these lenders, they can be an excellent resource when you’re strapped for cash.
Then, there are also lenders who don’t perform a credit check at all! Take our team at Georgia Title Loans, for instance. We offer loan approval in 30 minutes or less without running a credit check. As long as you meet our age requirement, possess a valid state driver’s license, and a vehicle with a clear loan, you could get the cash you need and drive your own car home.
Another advantage of choosing an online lender?
Most will allow you to perform a soft credit check to see your score before you even apply. This is a great way to take a look at what rate and loan amount you could qualify for without performing a hard credit check, which could lower your score even more. You could also enjoy quicker access to your money, as many online lenders advertise same-day or next-day funding.
Bad Credit Finance is Possible
Your credit score might be low, but your spirits don’t have to be. If you need a loan, you don’t have to let that number defeat and define you. As you work to improve your credit and pay down your debt, you can still get access to the money you need.
Today, there are many different online lending opportunities that can help you bypass the usual roadblocks on a conventional loan application. Bad credit finance is more than possible, as long as you know where to look.
If you’re interested in pursuing a car title loan, we’re here to help. You’re welcome to stop in at our Lawrenceville or Norcross location and start the process. Or, simply apply online to get underway even quicker!