A bank or a financial institution offers a variety of loan products that cater to each borrower’s individual needs. These products can be availed if you meet their eligibility criteria. It is a fact that lenders provide loans based on multiple eligibility parameters that are determined by a specific lender for each financial product.
One of the challenges for a borrower is to have a loan approved when they have a bad credit score. However, there are certain measures that a customer can take to get a personal loan despite a bad credit score. Let’s take a look at some of these measures as discussed below.
Alternatives for Loan Approval with a Bad Credit Score
- Applying Through Alternate Lenders
Most banks are pretty strict about their credit score requirements before sanctioning any loan. It is especially crucial in the case of personal loans as they are unsecured loans.
As a result, an applicant with a low credit score can apply for a personal loan through alternative lenders like NBFCs, and MFIs. They require the applicant to meet basic eligibility criteria for approval of personal loans.
- Applying With A Co-Applicant
One of the best ways to apply for a personal loan is through a co-applicant. Usually, banks require the co-applicant to be a member of the immediate family of the applicant. If the credit score of the co-applicant is good, then the bank will approve the loan, despite the poor credit score of the applicant.
- Providing Proof Of The Repayment Capacity Of The Applicant
The applicant will need to provide proof of his/her source of income. This is to certify that he/she has sufficient repayment capacity for the applied loan. A higher repayment capacity is a good indicator of the viability of the loan. Hence, the applicant can get bad credit personal loans guaranteed approval $5000 easily.
- Improve Credit Score
The applicant can try to improve his/her credit score by following a few simple measures such as:
- Repaying all existing dues or liabilities.
- Timely payment of credit card dues or EMIs.
- Keeping the credit utilization ratio in check.
These measures will improve your credit score after which you can easily get a personal loan from any lender.
- Apply For A Lower Loan Amount
This is one of the easiest and most probable ways to have a personal loan approved despite a low credit score. A bank will more easily sanction a lower amount of loan provided the applicant meets all the other eligibility criteria set by the lender.
- Pledge Collateral
Personal loans are unsecured loans. However, an applicant can pledge collateral or security with the lender to get bad credit personal loans guaranteed approval of $5000. It is a good strategy if the applicant has a low credit score that prevents him/her from getting a personal loan. By doing so, the lender will be assured of the viability of the loan given or can get the proceeds from the sale of the pledged collateral to minimize their losses in case of default.
So, use the above-mentioned tips while keeping your unique situation in mind, and get a personal loan approved today!