Nobody wants to be judged but when it comes to getting a loan, lenders will assess whether you’re qualified for a cash loan or not. It can be harder to get approved if a debtor is unemployed but don’t lose hope because it’s actually possible. Some lenders may provide an alternative solution for cases like this. However, there are certain conditions to follow.
Provide an alternative source of income.
If you don’t have a regular job or your credit history is extremely bad and you need to take out a short-term cash loan, you have to make sure you can provide an alternative source of income. It could be in the form of self-employment income, benefits, regular pensions, or even regular payments you receive from your partner or ex-partner. Providing any of these sources ensures the creditor that you are capable of making a payment. However, creditors may vary so you have to look for a bank or an online lending provider (check out peer-to-peer loans) that may acknowledge these alternative sources.
Opt for secured loans.
Secured loans are a good way to boost an appeal especially when credit score is bad. Opting for a secured loan lets you offer collateral in place of the borrowed money. Collateral covers your loan in case of default payment. Collaterals could be in the form of an asset: a house, a lot, or a car for an instance. But remember not to use this strategy for a short-term loan. You might take the risk of losing your asset since there is a short duration for covering your loan.
If possible, you can also appoint a co-maker who will be obliged to pay the loan if you fail to make a payment. Your qualification for getting a loan will be based on the co-maker’s credit history so choose someone with a good score. Just be careful when making a payment because they’ll suffer when you fall behind.
Improve your credit score.
Having a bad credit score is one of the common reasons why debtors get refused for a cash loan. Creditors are very particular when it comes to checking your score so if your credit score is bad, try to build it. Creditors shouldn’t be the only one to know your credit score, you should too.
To further determine your creditworthiness, lenders often review the debtor’s FICO score. It is a type of credit score presented by Fair Isaac Corporation or FICO. A FICO score often ranges from 300 to 850. Debtors with scores of 650 and above are considered good payers. Whereas individuals with 620 and below are likely to get declined. Here are different ways to check the debtor’s FICO score:
- Use Experian’s Freecreditreport.com for free.
- Ask a copy from the bank.
- Request a copy from FICO itself; although, they’ll ask you to pay for it.
If you figure your score is quite low, don’t panic. There are steps that you can take to improve your credit score. Find out how:
✓ Pay your bills on or ahead of time. No really, this is a strict rule.
✓ Never max out your credit cards. Use at least 30% of your credit limit. This will help boost your score.
✓Think about consolidating all your loans if you struggle with debt repayment in a timely manner.
✓ Do not open up too many credit card accounts just to have more available credit sources. This lowers your FICO score.
✓ Register to vote. This way helps creditors to further check your identity and permanent address. Knowing that you’re not moving around all the time indicates stability which is so important for typical creditors.