Tips for applying for bad credit loans

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April 27, 2019

Individuals who have bad credit often struggle when applying for loans and need to apply for loans that tend to have higher interest associated with them and often face punitive fines and charges when applying for credit. When applying for bad credit loans there are several factors to keep in mind which should work to improve on the process for doing so and help to obtain better overall results when applying for a loan.

Confront Your Past

When you are applying for a bad credit loan a borrower should perform some basic due diligence on themselves and understand their credit score and history. Obtain a credit report and scan through for inaccuracies and problems in your past. If there are small defaults or non-payments than consider paying them off as small defaults that may cost a relatively minor amount to address can lead to a significantly worse credit score that can be easily avoided. If minor problems like this exist, then proactively handle them before applying for debt. If your legacy debt issues are more significant, build a case history and identify how you fell into debt and what has changed so that you will be able to pay your debt going forward. Some people, as an example, have bad credit or needed to default on debt due to a medical problem or loss of job in the past, but have now turned around their situation and are better able to pay their debt going forward. Being honest with past problems and addressing the issues proactively with the potential lender can help to improve your chances of getting a loan.

Get Organized

Prepare a budget that shows your current income and expenses and identify how you will be able to comfortably be able to pay the debt back with your budget. Provide support for each item including pay stubs, rental agreements, and car loan statements, so that you can provide your lender with information regarding your ability to pay. If you have a detailed plan that addresses your ability to pay your debt than a lender is more likely to lend to you and you can improve on your chances of getting a loan from a company like Zebra Loans or others. Also, provide an explanation of how you will use the loan proceeds and any assets that you can use to pay it off if you need to.

Line Up Support for your Ability to Repay Debt

Lenders want to be repaid. Having support that shows that you will be able to repay your debt will help to improve on the interest rate you pay. Examples of things that will help you is to line up a friend or family member to guarantee your outstanding debt, pledge assets as collateral for your debt, or to have your employer verify your income and good standing in the company. These steps can make it easier to apply for debt even when you have bad credit.