Loans are a worry for those who have had credit issues. While it was true that loans were previously quite easy to get – even for those with a poor credit history – this has now changed. It isn’t to make it harder for people to get a loan when they are in financial difficulty; but rather to better protect against people ending up in a loop of loans. Still, it may affect a number of people in desperate need of cash. So what do you do if you have bad credit and get declined for a loan?
Why Companies Avoid Bad Credit
First, it’s important to understand why lenders may avoid bad credit clients for home loans, payday loans, and so on. There are a number of reasons behind this. For many lenders, it can be to do with any sort of poor credit history that you may have. Many companies will run your details through automated algorithms – called ‘scorecards – that will take data that relates to your application and from credit background checks to determine if you are applicable for a loan. This rather creates a situation where you either fit the profile of borrowers they like or you don’t. There’s no real human element at play here. A machine, essentially, determines whether you get the loan or not.
So How Do You Get A Loan With Bad Credit?
So, with all of this in mind, how do you get a loan with bad credit then? Thankfully, there are lenders out there who do things differently. Some lenders will not place so much emphasis on your past credit history and are more concerned with how you are managing your finances today – they won’t entirely focus on any bad credit you’ve had in the past. So, if you’re in employment, there’s a good chance you’ll be able to find a lender who will suit you.
Some lenders don’t use scorecards like the major lenders. They will put your application through their ‘decision engine’ software, which outlines whether you may fit their criteria. From that point on, if accepted, you are put onto an underwriter who will personally consider your details – so a machine doesn’t make the final decision, a person does. But what if you’re rejected by the decision engine or by the underwriter? Some lenders will pass you on, free of charge, to a firm that has a really clever computer system that can help you find an applicable lender. They will also make sure that anyone recommended to you as a lender will comply with all U.S. laws and regulations.
Qualities To Look For When Searching For A Loan Lender
If you are interested in taking out a loan, do not make the mistake that many others have by going for the first lender you lay your eyes on. Instead, read on to discover the qualities to look out for to find the best loans direct lender.
The first thing you want to concern yourself with is, of course, the options the lender provides. You need to ensure that their loans fit into your requirements and your financial situation. This involves taking all of the following into account – how much money you are able to borrow, the APR, how long you will have to pay the money back, whether you need to make one repayment or you pay installments and such like.
Aside from this, it is vital to go for a loan direct lender that is certified, authorized and regulated in the United States. It is a good idea to take the time to read reviews that have been left by previous customers. This will give you great insight as to whether people have been happy with the service provided. If most people have been dissatisfied, this should be a red flag, and you know to look elsewhere. However, you must consider the reviews as a whole – don’t let one bad review dictate your overall opinion. Finally, the best lenders will not charge you any fees for making early repayments and you will benefit from a fast deposit once you have been approved.
All in all, taking out a loan is a massive decision, and having bad credit does not mean you are ruled out. However, you need to think carefully before proceeding.