An installment loan is a loan where the borrower agrees to pay a fixed monthly payment over the agreed period of time. Using an installment loan for a home, a car, or a portion of a college degree can be a smart financial decision, but it can be tough to qualify for one with bad credit. If this applies to you, here are 3 ways you can get installment loans with bad credit to help out with whatever financial situation you’re facing.
1. Demonstrate an ability to repay
Although good credit is what lenders look for, your ability to repay is the most factor in the equation. This is what your credit score is supposed to indicate in the first place: your ability to repay. Yet, it doesn’t have to be the only factor in the mix. If you can demonstrate a steady income and a valid bank account, it also indicates an ability to repay and you increase your chances of being approved by that much more. When you’re getting ready to apply for an installment loan, ensure that you can demonstrate a steady income through whatever job you currently hold and a valid bank account. These two items will always be asked for in the loan application process.
2. Do research for installment loans that are right for you
One of the benefits of installment loans is that there are multiple lenders to choose from. You’ll be able to compare your options online and find the right one for you. Once you apply, you’ll be able to get the money quickly once you’re approved. This sounds great, but you don’t want to rush the process. Installment loans can have high-interest rates and there are also a number of disreputable lenders online. These lenders target individuals with poor credit rates, and you don’t want them to take advantage of your financial situation. Take your time to find what is right for you and never jump into a situation—or agree to a loan—that just seems too good to be true.
3. Raise your credit
Once you begin to research installment loans, it never hurts to try to raise the credit that is hurting you in the first place. Taking even a month to raise your credit by paying off any late payments, continuing to pay on time, utilizing only a portion of the credit available to you, raising your credit limit, etc. can be a game changer when it comes to getting a loan. The better your credit, the better your chances at getting approved.
Don’t worry if your bad credit is what’s keeping you from applying for an installment loan. One of the best aspects of this type of loan is that bad credit can be okay in this process. Lenders don’t factor only credit into their decision-making—focus on your ability to pay, raise your credit in the process, and do your research to ensure you’re getting the best possible rate for your financial situation.