$25,000 Unsecured Personal Loans: Why Approval with Poor Credit Scores is Possible

Once upon a time, the chances of people with bad credit ratings getting a $25,000 unsecured personal loan was next to nil. But despite the economic problems that are so prevalent today, applications for such large sums without security or good credit scores have every chance of being approved.It might seem strange, but the truth is that loans are approved on the basis of other aspects of the application, and not solely the credit score that the applicant has. This effectively means that credit history is irrelevant in terms of getting the green light, so the chances of getting loan approval with bad credit or excellent credit are pretty much equal.Still, the idea that there are unsecured personal loans available to anyone who wants one is not quite accurate either. There are criteria by which lenders measure the suitability of the applicant. Depending on their circumstances, the ability to repay can either be confirmed as likely or unlikely.Loan Limits for ApplicantsFinancial need is the motivation behind any loan application, but lenders have to assess the ability of a borrower to repay the sum borrowed before any decision can be made. For example, a $25,000 unsecured personal loan may be affordable to Applicant A but Applicant B, even if their incomes are the same.Repayment is the principal basis of any approval, and why lenders set loan limits for certain categories of applicants. For example, there are less stringent conditions set on loans between $1,000 and $10,000, than for loans in the $10,000 to $30,000 range. And, if the loan is unsecured, getting loan approval with bad credit is very unlikely for sums of $50,000 to $100,000.In fact, security is a standard requirement for very large loan sums. This is because of the perceived risk involved for the lender. Usually, unsecured personal loans are small is size, though $20,000 and $25,000 are available.Where Credit Scores Are AppliedThe only area that credit scores are applied to is in calculating the interest rate to be charged. The lower the score, the higher the rate, and vise versa. It is this that makes a $25,000 unsecured personal loan affordable or not. The rate affects the size of the monthly repayments, which in turn decides whether the debt can fit within the debt-to-income ratio.This ratio stipulates that no more than 40% of income should be dedicated to repaying loans, with the remaining 60% used for general expenses and preparing for those unexpected expenses that can pop up. Getting loan approval with bad credit is impossible if the 40:60 ratio is exceeded.One way to ensure the ratio is not exceeded is to lower existing debts before applying for the larger unsecured personal loan. This can be done by taking out a series of small loans to pay off specific debts.Improving Your Approval ChancesThere are other aspects to consider that can greatly help in an application for a $25,000 unsecured personal loan. One is to seek a longer loan term, so instead of repaying the principal over 24 months, choose 60 months to lower the required monthly repayment to something more manageable. Then, getting loan approval with bad credit becomes easier.Another is to be precise regarding the purpose of the loan. If an unsecured personal loan is to be used for clear debts, then lenders are much more open to approval. However, if it is to finance a vacation or to buy a new car, then it can be more difficult.