You may require a personal loan for a number of reasons, but what if you have a bad credit? Can you obtain a personal loan with a bad credit? Yes, of course you can still qualify for a personal loan, but for that, you have to take some additional steps. It doesn’t matter if your credit score is low as many lenders offer personal loans for bad credit to help you cover consolidation or emergency debts. Now let’s start discussing how you can get a bad credit loan in Toronto and GTA.
Step 1: Check your credit score
First, you need to check your credit score. For that, you have to look for the minimum credit score requirement by the lender. A borrower with a low credit can also qualify for a personal loan if his/her credit score falls within the minimum requirement.
Step 2: Compare lenders
Different lenders have different requirements for lenders, and their interest rate ranges also vary. So, it’s always recommended to compare lenders and their personal loan requirements to help you get the best deal. The most suitable lender is the one that offers you an affordable rate even if you have a low credit score. Also, look for other useful features such as quick funding, mobile app for managing loan payments, or credit-building tools.
Step 3: Pre-qualify
Pre-qualification helps you learn what loan amount, repayment terms, and interest rate to expect. It doesn’t influence your credit score and particularly helpful if you want to know about your qualification for a bad credit loan. Also, you can compare loan offers with pre-qualification features. Some banks and many online lenders provide this feature.
Step 4: Add a co-signer
Co-signed and secured personal loans will help you get a personal loan at a low rate. With a co-signer, you can add information on a person’s income and credit to your loan application. That individual agrees to repay your loan if you can’t. Whereas with a secured loan, you can offer your investment account or car as a collateral, meaning your lender can take your collateral asset if you fail to repay the loan.
Step 5: Apply
It’s useful to collect all the required documents to apply for a personal loan beforehand for accelerating the procedure. These usually include financial statements, pay stubs, Social Security Number, and W-2s. Some lenders may provide you with the decision in a day or two. But others may take up to a few days.
How bad credit affects your personal loan application?
When lenders get a personal loan application, they not just look for the reasons to accept it, but also decide what interest rate to offer and how much amount to lend. In case of a low credit score, lenders will approve a small loan amount, and that too at a high interest rate. It’s because the risk is higher in giving a loan to a borrower with bad credit. So, try building your credit to get a big loan amount at a low interest rate.