A credit score is a 3-digit numeric expression that decides the borrower’s eligibility get a loan. It helps the lenders to determine if the borrower fulfills the loan requirements. The credit score is affected by a lot of elements. It can lie anywhere between 300-900, and it is like a report card that decides one’s financial status. If you score anything above 750, it is counted as good; it is average if you score anywhere between 550 and 750, and any score less than 550 is a bad credit score. You can quickly get a personal loan with a high credit score, and an average credit score gets you eligible for loans with high interest. However, a person with a bad credit score has significantly fewer chances of getting a loan. But we did not say it is impossible. This blog will discuss how to get a personal loan with bad credit. Read on to know the ways.
- Give proof that you can pay the EMI’s
The lender will consider your income right after looking at the credit score. One of the steps to get a personal loan with a bad credit score is proving that you can pay your monthly EMIs. You have to convince the lender of your eligibility with a regular income and a stable job. If you successfully do that, the lender may approve your request.
- Apply with a guarantor
You can also get a personal loan regardless of bad credit with the help of a co-signer or guarantor. Putting the application with the help of a co-signer allows the lender to consider their credit score. If your co-signer has a good credit score, your chances of approval may increase. Similarly, the lender will get more confidence about your EMI payments if you secure a guarantor.
- Apply for a lower personal loan amount
The chances of getting a personal loan with a bad credit score automatically lessens. However, you can still apply for the loan by asking for a lesser amount. When you ask for a lower amount, it gives confidence to the lender about the less risk of default. He has to provide a lesser amount, making it easier for you to pay the loan.
- Pledge collateral
If no way works for you and you don’t know how to get a personal loan with a bad credit score, consider pledging collateral. Collateral is similar to getting a co-signer, except it is a property that is linked to the loan. If you fail to pay the loan, the lender receives the right to sell the collateral.
These kinds of loans that rely on your assets are called unsecured personal loans. Therefore, it is also a viable option.
Sometimes, a bad credit score may result from an error or mistake in your credit report. Check if there is a similar case with your report or not. Even small mistakes can affect the credit possibilities. Therefore, you must once check your credit report online to make sure it is error-free and if there is any, report it soon.
All the above methods are helpful if you don’t know how to get a personal loan with bad credit. But the best option is to improve your credit score with time and then apply for the loan again.