Taking out a personal loan can be a great way to consolidate debt, finance a large purchase, or cover an unexpected expense. But if you have bad credit, getting approved for personal loans in Boise or wherever you are located can be difficult.
Luckily, there are several things you can do to improve your chances of being approved for a personal loan with bad credit. Here are a few tips:
Check your credit report and score
The first step is to check your credit report and score to see where you stand. This will give you an idea of what lenders will see when they pull your credit. If there are any errors or negative items on your report, be sure to dispute them with the credit bureau.
Shop around for a loan
Don’t just apply for the first personal loan you find. Shop around and compare rates, terms, and fees from multiple lenders. Be sure to consider both traditional banks and online lenders.
Get a co-signer
If you have bad credit, getting a co-signer with good credit can increase your chances of being approved for a loan. Just be aware that if you default on the loan, your co-signer will be responsible for repaying the debt.
Be prepared to pay a higher interest rate
Because personal loans for bad credit come with a higher risk for lenders, they often charge higher interest rates. Be prepared to pay a higher rate than you would with good credit.
Consider a secured loan
If you have collateral, such as a car or home equity, you may be able to get a secured personal loan. This type of loan uses your asset as collateral, which can help you get a lower interest rate. Just be aware that if you default on the loan, you could lose your asset.
Rebuild Your Credit
Once you’ve taken out a personal loan, there are several things you can do to start rebuilding your credit. Here are a few tips:
Make your payments on time.
This is the most important thing you can do to improve your credit score. Be sure to set up automatic payments so you never miss a due date.
Keep your balances low.
Your credit utilization ratio, which is the amount of debt you have compared to your credit limit, makes up 30% of your credit score. So, it’s important to keep your balances low in order to improve your score.
Use a mix of credit products.
Lenders like to see that you can manage different types of credit, such as revolving (e.g., credit cards) and installment (e.g., personal loans). So, using a mix of credit products can help improve your score.
Monitor your credit report.
Be sure to check your credit report regularly for any errors or negative items that could be dragging down your score. If you find anything, be sure to dispute it with the credit bureau.
By following these tips, you can improve your chances of being approved for a personal loan with bad credit and start rebuilding your credit.