Applying for Loans With Bad Credit Histories: Which Tricks Help to Secure Approval

Aug 20
11:08

2012

Lara Sawyer

Lara Sawyer

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Those applying for loans with bad credit histories do not need to feel unconfident. With the right approach made for the loan types that truly suit, the chances of getting approval are greatly improved.

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It would be a mistake to believe that applying for loans with bad credit histories is a lost cause. The truth is that people who have low credit scores do not find it as difficult as they would have in the past. So,Applying for Loans With Bad Credit Histories: Which Tricks Help to Secure Approval Articles securing a loan is possible.But that is not to say that loans are freely available to them. In fact, gaining approval from lenders still depends on applicants meeting the necessary criteria. The difference with the past is that criteria have changed.What is more, by thinking cleverly about the options open to them, and what terms are realistic, it has become much more possible to secure loans with bad credit. In fact, even those of us with very low credit scores can still feel confident when considering these three loan options.Long-Term Installment LoansThe chief issue for lenders is whether or not the borrower will be able to make repayments, so that they get their money back. The problem for those seeking loans with bad credit histories is that the perceived likelihood of meeting those repayments is lower, making lenders reluctant to take on the risk without raising the interest rate considerably.The reason for such low confidence is that the sum due each month may be too high to be manageable. So, the obvious step towards gaining approval from lenders is to lower the monthly repayments. This means extending the term of the loan, perhaps from 24 months to 36 or even 48 months.This could result in seeing payments of $600 on a $10,000 loan, for example, slashed to maybe $400. This effectively means that borrowers seeking loans with bad credit hanging over their heads are better able to meet their obligations.Sponsored ApplicationsA sponsored application is basically a loan application that includes a guarantor, or a cosigner. The value that this addition has to those applying for loans with bad credit histories to their names, is huge. This is because the weight of responsibility is shifted from the borrower to the guarantor.The trick, however, is to find a guarantor that has an excellent credit history and sufficient income to convince the lender that the loan is guaranteed to be repaid. This is, after all, the whole secret to gaining approval from lenders, regardless of the niche they might be operating in - personal loans, commercial loans, or home loans etc.For this reason, the guarantor will be assessed quite closely by the lenders. They must provide proof of income and employment, and often they are only accepted if they actually own their own home. Getting $5,000 or $10,000 loans with bad credit is never simple, but with the help of a guarantor, it is easier.Short-Term Payday LoansIn truth, payday loans are short-term loans, what with repayment expected on the next payday. The great advantage of these loans to those seeking loans with bad credit histories is that the lenders have no interest at all in these histories. All they need is proof of income, and a bank account through which to draw repayment automatically on the agreed day.A payday loan is considered one of the easiest to be approved, as the sum borrowed is secured against the upcoming paycheck. Normally, gaining approval from lenders is heavily dependent on the ability to maintain a repayment schedule, but in this case the repayment is completed in one go.However, while getting such loans with bad credit is no great problem, securing a large loan is usually not possible. Unless a paycheck is significant, then the loan is limited to $1,500, though sums as low as just $100 are possible.