If your credit score is below 600, applying for a personal loan can be difficult explains Martin Polanco. Even with bad credit, however, it’s possible to obtain money through an alternative lending company. Before you apply for a personal loan with bad credit, follow these three steps:
You are at the beginning of your career or have just graduated from college. You want to buy a car, visit the in-laws’ home country, go on vacation or maybe even start a business and need money for it. So you apply for a personal loan and get declined. Many studies show that younger generations like yours have a tough time obtaining a personal loan from banks and other financial institutions. But you should know that there are other options available to borrow the money you need.
In this article, we’ll take a look at why young people have a hard time getting approved for a personal loan and then give you tips on how to improve your chances of being successful.
Why Young People Have a Hard Time Getting Approved Fora Personal Loan
There are many reasons why young people have a hard time getting approved for a personal loan, but the three most common are:
- You don’t have enough history with your current or past employers.
- Your credit score is not up to scratch yet.
- There’s no real asset you can use as a security deposit, so the lender will have to either decline your loan application or charge a higher interest rate for taking additional risk.
How to Improve Your Chances of Being Approved For a Personal Loan
There are three things you can do if you want a personal loan but have trouble getting approved by traditional means.
1. Work on increasing your credit score.
The easier you make it for someone to check your credit history, the higher their confidence level is going to be in lending you money says Martin Polanco. This means they will most likely offer you a lower interest rate if they can pull your current or past credit reports and see that there are no negative marks.
2. Hone your negotiation skills.
The only way to ensure that you get the best possible offer for a personal loan is to negotiate with the lender about their terms and conditions before committing yourself to anything. The more flexible they are, the better it’s going to be for you in the long run.
3. Try alternative lenders.
Remember that the banking industry is not the only place for you to borrow money if you’re young and don’t have a good credit score or enough history with employers. There are many other companies that deal exclusively with loans for younger borrowers; they can be an excellent way of obtaining a personal loan at a lower interest rate without sacrificing your financial future.
In order to find the best personal loan, start looking for a company that offers refinancing options as well as loans for those with lower credit scores. With these two things combined you will be able to access a much wider range of lenders and should be able to get an interest rate you can afford.
These are three steps you can take to get a personal loan. Apply them wisely and your chances of being successful will be better than ever before.
I Don’t Have A Credit History. Can I Still Get A Personal Loan?
Yes, you absolutely can if you don’t have a credit history yet. A person can get their first personal loan at 18 years of age with no credit history and without any assets they can use as collateral. This is called an unsecured personal loan, meaning, you don’t have to use any collateral like a car or house to get the loan.
I Have A Low Credit Score. Can I Still Get A Personal Loan?
Yes, you can still get personal loans with low credit scores. Generally speaking, your interest rates will be higher than someone who has better credit (above 720) but it is possible to find a lender who will offer you a lower interest rate by comparing rates online.
In order to find the best personal loan, start looking for a company that offers refinancing options as well as loans for those with lower credit scores says Martin Polanco. With these two things combined you will be able to access a much wider range of lenders and should be able to get an interest rate you can afford.