Don’t fear: bad credit isn’t the end of the world; it just means you need to fix a few issues on your credit report for lenders to start loaning money to you again. Your bills are piling up and you need to find a way to consolidate your debts into one affordable monthly payment, but you have bad credit.

You have tried negotiating with multiple lenders, but they’ve all turned you down, no matter how much money you put down to secure the loan. If you are running out of options to help pay for unexpected expenses, medical bills or just to get by until your next payday, then you need to learn how you can apply for a loan when you are suffering from bad credit.

Be Upfront with Your Loan Officer

Having bad credit isn’t as bad of a stigma as it was a few years ago before the housing market crashed, causing a domino effect and millions of people to lose their jobs, homes and life savings. Like you, thousands of Americans struggle with bad credit and have difficulty finding a lender to approve even a small loan request. But if you are determined to get approved for a loan because you need it for an emergency or you are trying to rebuild your credit, it’s time to sit down with your loan officer. When you meet with the loan officer, let them know upfront that you have poor credit. Chances are, if you have assets, the bank will hold them as collateral to secure your loan. This provides an excellent opportunity for someone who is trying to rebuild his or her credit.

What to Do If the Bank Denies Your Loan Application

All hope is not yet lost when your bank loan application is denied. There are several options you can choose from to obtain the money you need to pay your bills and increase your credit score. If your bank won’t accept your loan application, try these four options to secure the money you need:

  • Peer-to-Peer Lending- Instead of borrowing money from your local bank, you can post your story online to individuals who have the money to spare. Keep in mind that peer-to-peer lenders often have strict repayment terms and higher interest rates, and have a much higher stake in lending you their money.
  • Visit a Credit Union- If your bank won’t lend you the money you need, try a credit union. Often, credit unions are more accommodating to individuals who have poor credit.
  • Use Collateral to Secure a Loan- If all else fails, try to borrow against one of your assets. Some homeowners take out a home equity line of credit to help with bills, since the interest rates are lower and the terms are longer. In turn, this makes monthly payments easier to manage.

Make Sure You Have all the Necessary Documents Ready

Once you are pre-approved for a loan, you will need to provide all the personal and financial documents for the underwriter to determine what your final interest rate and term will be. Many debt counseling companies can help you decide what information you’ll need to provide to the loan officer. This list may include:

  • Your driver’s license or state-issued ID card.
  • An explanation of why your credit score is low.
  • Any other documents the loan officer requests.
  • The title, registration and deed of your possible assets.
  • Your social security card or your co-signer’s social security card, if using a co-signer.
  • Paycheck stubs, bank statement and/or federal tax document from the previous year.

Once you submit the required materials to the underwriter, it may take a few days or even up to a month (depending on the asset you secured your loan with) for your loan to be approved. When the loan approval is received, the loan officer will sit down with you and go over the loan details, including the payment arrangement, interest rates, prepayment penalties.

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