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Articles » Low Credit Score Loans | | 10 Essentials That Increase Your Chances of Getting Loans With a Low Credit Score |
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Before you apply for loans when you have a low credit score , it is best to build up your credit score and repair your credit first in order to make it more attractive to the lender’s eyes. Although low credit score lenders will not use your credit score as the main criteria when you apply for loans, having a higher credit score will definitely help. Here are some ways by which you can increase your credit score and make your credit report more attractive.
1. Get a copy of your credit reports from the three credit reporting agencies – Experian, Equifax and TransUnion – and double check them to make sure that there is no wrong or inaccurate information.
2. Check your credit score to see where you currently stand, and periodically monitor your credit score’s performance.
3. If you see any inaccurate information on your credit report, file a dispute with the credit bureau from which you obtained your report.
4. If you have any accounts that are delinquent, such as records of late payments, charge-offs, judgments or collections, pay them off.
5. Make sure that you make timely payments on all your debts from now on. A consistent good payment pattern will pull up your credit score and will positively affect your chances of having your loans approved.
6. Work to bring down your debt to income ratio. Your total debts should not exceed 36% of your total income.
7. Avoid incurring any new debt, as this may make the lender wonder if you can afford to pay the loan back.
8. Use your credit cards wisely and don’t max them out. Where possible, opt to pay for your purchases in cash.
9. If you are currently paying only the minimum on your credit cards, pay more in order to bring your balance down.
10. Don’t close old credit accounts even if you’re not using them as this will pull your credit score down.
While it will take a while to build up your score again, every bit of positive information on your credit report will be in your favor, and will increase your chances of getting approved for the loans you’ve applied for.
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