Bad Credit Personal Loans: One Rejection Does Not Mean Stop

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Having an application for a bad credit personal loan rejected is no reason to give up hope. Often the reason for rejection is something small and simple to adjust, so trying again can reap success.

One of the biggest myths we are led to believe is that rejection of a loan application by one lender means rejection is guaranteed for all others. The truth is that rejection is not a guarantee of continued application failures. In fact, often applications for bad credit personal loans are rejected for something simple.

What this means is that by simply correcting an error, the application can be approved by another lender. Often, the error is something as small as missing basic criteria, or as straightforward as an unrealistic loan size. It is never down to credit ratings, so getting personal loans approved with bad credit is always possible.

This is not just optimism. Lenders rarely ever know an applicant personally, and so decisions rest on the criteria set and the value of the information provided. Once the basic criteria is met, there can be little surprise that bad credit loans for personal use are approved.

How Rejection Can Improve Your Chances

It sounds strange but suffering an initial rejection with a bad credit personal loan application, can improve your approval chances in the long run. With every rejection comes the chance to fine tune the application.

For example, an application for a loan of $50,000 can be rejected on the simple basis that the applicant has not got a large enough monthly income to make the repayments. However, even with a monthly income of $10,000, this judgement might be made. This is because the judgement takes the debt-to-income ratio in account, a ratio by which lenders go to ensure that a borrower does not overextend their debt.

Basically, personal loans approved with bad credit must leave an income buffer to deal with any sudden expenses. But by reducing the size of a bad credit loan for personal use, say $25,000, approval is more likely. It is also possible to apply for two loans of $25,000 to reach the sum needed.

Why Bad Credit is a Minor Factor

It tends to surprise people when they learn that a bad credit rating is not enough to see a loan application fail. This is because a bad credit rating is an evaluation of past facts, and are not reflective of a current attitude. A bad credit personal loan now might very well be repaid without a hitch.

The credit rating is calculated based on hard facts, but does not take into account the situation surrounding it, so sometimes personal loans approved with bad credit is only just. For example, if someone defaulted on a personal loan last year, it might be because of an unexpected redundancy after the loan was taken out, making repayments impossible.

For this reason, many lenders look for long-standing trends rather than recent instances before ruling on a bad credit loan for personal use. So, the actual score does not really matter.

Typical Criteria to Meet

So what are the vital criteria that we must meet when looking for a bad credit personal loan? Well, they break down into three areas: age, income and citizenship.

Firstly, no-one under the age of 18 is permitted to get a loan, so lenders want ID to confirm that an applicant is not too young.

Secondly, as already mentioned, to get a personal loan approved with bad credit, it is necessary to prove sufficient income is at hand. This usually means providing a copy of a pay slip.

Finally, only US citizens are entitled to seek bad credit loans for personal use (or any other use) so a passport or social security number is required.

After these three criteria are satisfied, the matter is all but settled. But remember that should the bad credit personal loan application be rejected, simply go elsewhere. There are hundreds of lenders online.

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