Working in the finance industry, I see a lot of people who want to take out bad credit loans. In other words, they try to find banks that are willing to deal with their current credit situation. Most of the time they are either turned down or end up finding a really shady loan product.
If you have really bad credit, you don’t want most of the loans that would be available to you. They will end up putting you in a much worse position financially and that will further damage your credit.
To put it simply, if you can’t get the loan from a bank, you don’t want it.
This article will help you to prepare yourself to get a proper loan from a bank – even if you have bad credit now. Your credit situation can be turned around quickly if you’re willing to do a little planning and work.
First, analyze your current position. What are the problems you have on your credit? Here are a few of the possibilities:
High revolving balances
Repossession or other loan default
None of these issues are as big of a problem as they may seem. I know people who have been able to get bank loans within a reasonable amount of time after a bankruptcy and if they can, you can.
Once you are fully aware of what your problems are, clean them up. If you have late payments, start making on-time payments. If you have high revolving balances, start paying those balances down. If you have been sent to collections, pay them off or dispute the collection.
If you have a repossession of bankruptcy, you can’t really fix the issues but you can start to pay on-time now.
Once you have started cleaning up your problems, you need to establish a history of on-time payments. This history doesn’t have to be super long but you need to have one. Six months of paying on time is way better than zero months.
It’s impossible to establish a history of paying on-time if you don’t have accounts that report to credit bureaus. I had to take out two secured credit cards to fix this issue. If you don’t have credit cards, you need to get some.
Manage those credit cards wisely. Put a tiny amount of them each month and pay them off. Wait six months and you’ll be amazed at how much your credit will improve. On the other hand, if you max them out you’ll see your credit score tank.
Getting a loan from a bank will be a lot easier once you have gone through this process. If they see a bunch of on-time payments they will be more willing to overlook mistakes of the past.