Credit scores are a very important aspect of getting a loan. Therefore, having bad credit creates a barrier to receiving loans no matter the economic conditions. The problem right now is that the poor economy has made many traditional lenders even less likely to grant large unsecured loans at all. This means that having bad credit makes the prospect of receiving these loans even less likely.
Fortunately, there are still ways to get a loan without collateral and with bad credit. The trick is knowing where to look and which lenders to talk to as well as which requirements you need to meet. Having bad credit makes finding large unsecured loans more difficult, but still not impossible.
Credit Explained: Your Income/Debt Ratio
Finding a large unsecured loan with bad credit is not as hard as you may at first think since the term bad credit is not a cut and dry equation. The reasons for bad credit can vary. Therefore another number is equally important, and that is your income/debt ratio.
Basically, if you want a large loan, you will need to prove to a lender than you can afford the monthly payments on that loan. This means that your income needs to significantly exceed your current payments and debts. For example, someone making $5500 a month who has $3500 of bills each month will be able to afford a new loan. On the other hand, that same person will not be able to afford a loan as easily if he already has $5200 of bills each month. It's all about your ability to pay.
Therefore, before you go to a lender to discuss a large personal loan, make sure that you take a detailed and honest look at your current budget. Your bad credit will still affect your loan application, but the more you can afford, the better off you will be.
How to Meet the Criteria
There are several other factors that you will need to account for in trying to secure a large personal loan. Before even contacting a lender, even a lender that you find online, it is important to make sure that you have all the necessary paperwork. This includes the following:
· At least one form of government ID
· Proof of your income
· Proof of your residency
· Your SSN
You also may want to take some time to improve your credit history before trying to find a large loan. One good way to do this is to take out smaller loans and repaying them on time. Finding a small loan of as little as $500 and then making certain to repay it on time will make a great impression on a lender when you look for a larger loan - he will be far more likely to lend to you if you show a recent history of responsible repayment.
Make a Good Case and Check Your Numbers
Finding large unsecured loans is not as simple as finding smaller ones. With bad credit, large loans without any security pose a huge risk to lenders. Therefore, you need to make sure that you do more than ask for a loan. Instead, you need to earn it. This is accomplished through proving your ability to repay this large loan and making the lender confident in you. Therefore, make sure you check all numbers and are certain that you can repay this large loan before making any moves.
Hilary Bowman is the author of this article. She works successfully as a financial advisor with years of expertise on Military Loans for Bad Credit. Hilary publishes informative articles about Bad Credit Loans and other financial topics at FastGuaranteedLoans.com
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