Obtaining a person loan with bad credit can be an absolute nightmare. Most banks won’t even talk to you, and the only alternative is usually a high risk finance company. The only way you can generally go through a bank with bad credit is if you have a lot of assets, or if you have some sort of collateral that you can put up to give the bank security.
The problem with finance companies is that you end up paying in fees almost as much as the principle balance that you originally borrowed since the interest rates are so high. If you are not hard pressed for the money, then you could try to improve your credit score before actually applying for the loan. This is easy to do if you know how the credit bureaus operate.
How Can You Improve Your Credit Score Before Apply For a Bad Credit Personal Loan
The FCA allows people to dispute adverse items on their credit report. Any dispute that is made must be verified with each creditor that you dispute within thirty days, or the credit bureau has to delete it from your report. What most people don’t realize is that they should dispute negative information even if it is valid. Items stay on a person’s credit report for 7 years.
If the debt is old and is listed as negative on your report, then chances are that the original company will not respond to the verification from the credit bureau. They often ignore these requests, because they feel that so much time has elapsed that they won’t get the money anyway, or because very little is kept in a paper file. With many companies moving to electronic files over the last decade, many older files were purged rather than being moved to the new electronic system.
This works in your favor, because any negative item that is removed improves your credit score. When you dispute the report, be sure to not lie. Even if the negative information is valid and you want to dispute it, try to find something wrong on the listing that you could dispute. It cannot be a frivolous dispute, or the credit bureau may ignore it.
How Will Improving My Credit Score Help Me Get a Personal Loan with Bad Credit?
Banks base a personal loan application approval on income, length on the job, assets and other criteria. They typically have a standard scale on the credit score system that they will loan money to. If you fall in that range and meet their other criteria, then they will most likely give you a loan. Most people have success in removing at least part of the negative information on their credit report when they file a dispute.
If you removed five items for instance, that could mean that your credit score could improve by thirty to fifty points. Believe it or not, those extra points could qualify you for a personal loan through a bank when you might not otherwise have been eligible without them. It is advisable that people dispute the information every six months.
Even if they don’t get something removed the first time, they may get it removed the second time since the company may feel that if they responded once that they don’t have to again. It is the law that they have to verify or it’s removed. This is one loophole in the system that is a complete advantage to the consumer.
How Long Does It Take To Get a Personal Loan With Bad Credit and How Do You Apply?
When you are applying for a personal loan, you can generally do it by phone, online or in a lending institution if you prefer face-to-face contact. The loan officer assigned to your case will spend around twenty minutes or so with you asking various questions so they can make a determination on your loan. If you have all of the information that they need to make a decision, then a personal loan can be approved in as little as thirty minutes.
However, some places can take up to three or four days to approve a personal loan. If you are approved, then they will give you a check for the amount of the loan on the date that you are approved. They will also make you sign a promissory note, and give you a copy of their terms and conditions. You will have a payment schedule that you must stick by to continue to improve your credit score.
Getting a personal loan with bad credit can be accomplished, but you can expect to get turned down at some establishes. The key is to stay persistent until you find a company that will work with you to get you the loan you want and to rebuild your credit.