Before you get approved of your loan application, the lending company would check all your documents, including your credit files. Your credit files are thoroughly checked and evaluated by the lenders to determine your credit standing. The higher your credit score is, the higher your chance of getting the loan.
But what if you only got a fair credit score? Does this mean that you already lose your chance? Of course not. You can still get a reasonable chance of getting approved by merely following these essential tips that might help you secure your loan, despite having only a fair credit score:
Choose a Fair-Credit Lender
There are hundreds of lending companies that offer all types of loans. Some of them even offer the best personal loans for fair credit. You only have to find the ones with the minimum credit score requirement of 580. Please take note of these lending companies and proceed to compare each of their offers.
Choose the lending company with offers that are convenient for you. But before applying, check first if this lending company has credibility and is reliable enough to be trusted. As much as you want to get approved of your loan application, choosing an excellent and reliable lending company is still important.
Avoid predatory lenders that propose easy loan approval but require you to pay extra fees with a too high-interest rate. These kinds of a lender will only lead you to financial hardships in the future.
Get a Cosigner
Having a person to become your cosigner increases your chance of getting approved of your loan, especially if that person has a “very good” or an “exceptional” credit score. A cosigner serves as a backup payer or an additional repayment source for your loan. He/she signs a contract with you to agree to his/her responsibility as a cosigner.
When choosing a friend to become your cosigner, it is advantageous if that person has a strong and dependable relationship with you, a secure credit history, stable employment, and good health. As a borrower, you become your cosigner's liability. So, be a responsible borrower by paying on time and do not put both of your reputations at risk.
Be Realistic in Deciding for the Amount of Loan
The money you loan becomes a debt that you need to repay with interest. So, be realistic in deciding on the amount of money that you want to borrow. Take into consideration the reason and the purpose of your borrowing. Borrow only the amount that you need. Also, consider how you will repay it and its interest in the future.
Avoid loaning a huge sum of money, especially when you only have a credit score that ranges from 300 to 669. With this credit score standing, you'll be less likely to get approved of your loan application because the lending company would consider you as a risky client. So, instead of applying for a huge amount of loan, apply only for a considerable amount.
Submit All the Requirements
Every lending company has requirements that you need to comply with when you apply for a loan. These requirements are mostly documents that contain your personal background information. Lending companies can either approve or reject your loan application based on these documents. Thus, it is always better to prepare them beforehand.
Gather all your documents, including your proof of identity such as driver's license and other IDs, proof of residence such as voter's card, bank statement, property documents, etc. After gathering, check if they are all valid, accurate, and updated. Then, proceed to submit them all entirely to the lending company.
The lending company will also provide some documents, including contracts, that you need to fill-up and sign. So, take care to provide the correct information and read all the terms and conditions before putting your signature on the paper.
Be Responsive to Your Lender
After submitting your requirements, the lending company will start processing your loan application by checking your files and background. They will try to contact you to confirm some of your information. They will ask some questions regarding your loan application. So, it is essential to be responsive.
Some lending companies have pre-qualification processes that involve talking with one of the staff of the lending company. The lender would offer how much they could only allow lending, based on the documents you provided. This pre-qualification process is usually done over the phone.
Having only a fair credit score may reduce your chance of getting your loan application's approval, but there are still possible and useful ways to boost your chance. The tips mentioned above may help you, but it still depends on the lender whether to give you a go.
When you get the approval, make a way to improve your credit score by paying your debt and bills on time and by reviewing your credit report every once in a while to check if there are any errors. Enrolling in a debt consolidation program might also help.