Most lenders of unsecured loans, such as payday installment loans, often mislead people with bad credit scores. They state in their marketing campaigns that consumers can be approved for a loan and get the cash they need even with their bad credit scores. Although this is true, more often than not, these consumers get unfavorable loan terms and very high interest rates compared to those with good credit standings.
Getting a payday installment loan or any other sub-prime loans with poor or bad credit scores is not easy. So for those who need to get a loan but have a bad credit score, the following steps may be a big help of increasing your chances of getting approved with good terms:
1. Do not apply with a very low credit score. This is important advice for any consumer. Before signing up for a payday installment loan, boost your credit scores as much as possible. This can be accomplished in a number of ways if you know what factors influence your credit score. Use them to increase your credit score.
Note: A credit score consists of the following: payment history (35%), outstanding debt (30%), credit history (15%), and types of credit recently used (10%). Your payment history includes your timely, late or missed payments, with specific details about how much you owe, how late the payments are and how many times they occurred. The outstanding debt includes the unsettled accounts you have. The credit history refers to the age of your loans and credit accounts. And the types of credit include the variety of accounts you have recently used.
2. Next, collect all important documentation of your salary, your tangible assets, your present address and former addresses, your social security number, and your tax documents. These are important documents most lenders ask for when applying for a payday installment loan, especially with a bad credit score.
3. Look for a lending company that accepts loan applicants with not so good credit scores. Usually, consumers with bad credit scores are likely to be given higher interest rates and strict repayment schedules. So, search for lenders that offer the most affordable rates with better loan terms and deals.
4. Have a savings or checking account at least 90 days old. Most lenders of payday installment loans require their applicants, especially those with bad credit scores, to have a personal checking account in good standing.
5. As much as possible, have a regular job and maintain employment during the application process. To be approved of a payday installment loan despite of having bad credit scores, you must at least have steady and regular employment to be able to assure the lender that you can meet the minimum monthly payments. Also, most lenders require their borrowers to have at least $1,000 of net monthly income. You can provide the lender with copies of your most recent paychecks as proof of your income.
Getting a payday installment loan despite a bad credit score is possible as long as you make timely payments, prepare proper documentation and choose a lender that will give your fair terms and rates.