Looking for a personal loan can be tricky if you have a bad credit score, but there are still plenty of options in the form of bad credit loans. We’ve put together a short guide to help you find out your eligibility and what to look out for when applying for a bad credit loan. Read on to find out more.
Why might a loan application be rejected?
There are several reasons that a loan application can be rejected, depending on the eligibility criteria set by the lender. Lenders offering bad credit loans usually still accept those with a poor credit score, but they still have minimum criteria for acceptance, so it’s always worth checking your eligibility first.
The following things may stop you from getting a bad credit loan:
- Bad credit history – if you have had trouble repaying loans or credit cards in the past then this could be a contributing factor to a rejection.
- Incorrect details – make sure you check all of your details thoroughly before you hit ‘Submit’
- Unstable employment – a lender always needs to see that you can easily repay any form of borrowed funds, so if you are only working part-time or are unemployed, it can become very difficult to get accepted
- Too many loans – your loan application will usually involve a search of your credit file, which can often reveal if you are already borrowing money. Having multiple existing debts could be a contributing factor to a rejection for a bad credit loan
If you have already been rejected for credit and you’re wondering about what to do next, have a look at our guide; ‘What happens if you are refused credit?’.
How to increase your chances of being approved
- Check your credit rating – before attempting to apply for any financial products, always check your credit rating first. This will give you an early indication of whether you are able to apply for certain loans
- Meet the income requirements – it’s always worth doing a bit of research to see if a particular lender has minimum criteria for accepting you for a loan. This might include a minimum income amount
- Don’t hold more loans than you can afford – if you’ve already got multiple loans or credit cards and enter the amount you have to pay per month in your application, the lender will see you would struggle with further debt, leading to a rejection. In this instance, think about paying off your current debts before applying for anything else
- Choose the right type of loan – figuring out the right type of bad credit loan can increase your chances of being accepted. For example, having a very bad credit score might mean that a guarantor loan will be better suited to your circumstances than a short-term loan. Read more on comparing bad credit loans here.
Start comparing bad credit loans
If you feel like a bad credit loan might be the right thing for you, start off your search by filling in our moneymatcher form to narrow down your options. This will also indicate the likelihood of whether you will be accepted, all without affecting your credit rating.