6 Ways to Overcome Bad Credit and Apply for Loans

There are many reasons why an otherwise upstanding and responsible citizen could have credit problems. Life doesn’t always go the way we think; anything from business cash flow problems to investments gone wrong, divorces, and injuries can rapidly sink someone into an unexpected financial draught.

It’s important to remember that while bad credit history can certainly make things difficult, it’s by no means the end of the road. In addition to working to improve your credit score – making credit card payments, repaying debts, etc. – there are actions you can take to defray the impact of bad credit.

Especially if you’re looking to take out a loan, it’s critical that you come up with a game plan for how to work around bad credit.

Demonstrate job stability

A solid employment record is very important in overcoming bad credit history and qualifying for loans. Showing that you’re a consistent worker with a steady history of good employment can make the difference in convincing lenders and banks to accept you as a loan recipient. 

Job stability is also key in acquiring payday and installment loans that can stabilize you through rough times. Quick Loans offers a new mobile app and portal called Leap Credit, which makes the process of applying for installment loans simple and secure. 

Leverage the value of your other assets

There are many types of financial assets besides liquid cash flow that count as powerful forms of collateral. Life insurance policies, 401k’s, home or property ownership, bonds, stocks, and many more can all be leveraged to show that an individual has enough financial value to entrust them with loans or investments. 

If you’re applying for a loan or credit application, it is highly recommended that you list such assets. You can even mention valuable household items or other belongings like boats and paintings. 

Make a larger down payment on any loans or payments

One of the best ways to get a good loan is to make a large down payment right at the beginning to show you’re serious. Not only does this send a signal to the lender that you’re reliable, but this larger payment will also reduce your monthly payments down the road. 

Additionally, a large down payment can also improve your interest rates. The more you can show lenders that you’re cash-friendly and not desperate, the more amenable they will be to lending.

Pay off debts or consolidate debt into one payment

One of the most common ways to defray the negative effects of bad credit is to consolidate multiple debts into one. Debt consolidation options are all over the place and not necessarily right for everyone. If possible, you should try to pay off any debts – especially any high-interest debts, such as credit cards – when at all possible. But debt consolidation can work if you have a clear strategy and timeline for how to pay your debt down.

Get a better credit ratio

Having unpaid debts hurts your credit score, but so does having an exorbitant number of credit lines open. Even if you have a low credit balance, if that debt is spread over half a dozen or more credit cards or accounts, this reflects badly on your overall credit. To lenders and creditors, this is a mark of irresponsibility and poor planning. 

This is another reason why credit consolidation can be helpful but, in general, it’s better to have fewer big outstanding accounts than a great number of small debts. 

Avoid making multiple loan applications

It can be tough to wait to hear back from a lender before applying for another, but it’s better to minimize the number of loan applications you make. The reality is that every time you submit a loan application, it shows up on your credit history. Having several of these applications in a short period of time sends a signal to lenders that you are panicky and desperate, which at least on paper makes you seem to be a risky investment. 

 

Disclaimer: This content does not necessarily represent the views of IWB.