We live in a pretty trying time for many of us right now, and there are fresh challenges everyday that many of us weren’t facing a month ago. This crisis is hitting many of us close to our wallets – whether it’s job layoffs or salary reductions (I’ve heard of both from friends), or even just worrying about what’s to come for us personally or our businesses. Now more than ever it’s probably a good time to ensure our financial house is in order. According to a recent survey, 69% of people have less than $1,000 in a savings account. That’s pretty scary and any hiccup with your income could make paying your bills, buying groceries, and handling other personal expenses, quite difficult, or near impossible.

There’s been a lot of talk in the news about stimulus and loans, trying to get relief into the wallets of those that need it the most. Whether you’re a small business trying to survive, or an individual, taking out a bridge loan to tie you over could be in the real of possibility for you. Banks, governments and other lenders are certainly aware of the difficulty being faced, and appear to be willing to work together to make sure we all survive this crisis!

As you are looking over your business or personal finances, start getting yourself in a better position to be approved and obtain a loan that may hold you over! Please note that it’s the policy of YMF to only use debt for worthwhile purposes, but this financial crisis seems pretty worthwhile to me if it means the difference between making it or not making it.

Gather Your Personal Info

Before you start applying for personal loans, it’s important to determine where you stand from the lender’s perspective. Put yourself in their shoes and think if you’d approve yourself to borrow money; if you’re a likely candidate to pay it back.

First, take a look at your credit score and report. Your credit score will show you what a lender will see as they review your personal information. To determine where your credit stands, you can check online at a site like Credit.com. Checking your credit score won’t affect the credit. Instead, the report is considered a soft inquiry or soft pull. It’s not strong enough to damage what you already have. 

The good news is that you don’t need an 850 credit score (which is near perfect) in order to get a loan (even I don’t have an 850 score). However, your score will impact the terms and conditions you qualify for. It can also impact loan amounts and interest rates. For example, bad credit loans often come with higher interest rates. They’re also usually issued at lower amounts.

Creditors usually look for a good credit score between 700 and 850. A fair score lands between 620 and 679. Low to poor ranging scores land under 580. Once you understand your credit score, you estimate the type of a loan you could receive, and also potentially figure out if you should pause and attempt to improve it before applying (if there’s time).

Improve Your Credit Score

It can help to improve your credit score before you start applying for loans. Otherwise, your low score could get you rejected off the bat. I realize that every situation is unique and you may not be able to improve your situation first but it’s worth checking into!

First, consider paying down your debts. It helps to pay off the debts with the highest interest rates as soon as possible. Review your credit report for errors and dispute those errors as soon as possible. In the meantime, limit the number of hard credit inquiries on your credit history under your score improves.

Each loan application you submit will trigger an inquiry into your credit. Racking up too many hard inquiries can lower your score, so do your research beforehand and limit the number of applications.

You can check out these plain green loans reviews before applying as it’s wise to do a little homework beforehand.

Talk with Your Bank 

After reviewing your credit score and report, take the time to determine the minimum credit score requirements lenders are looking for. You can start by visiting your bank or credit union. They’ll already have an understanding of your financial profile. 

Credit unions usually have more flexible lending standards. As a result, they’re more likely to offer you a small personal loan. 

If you’ve worked with the same bank for years, however, you might want to visit the bank’s loan department. They can help you learn how to get loans with bad credit. They can also tell you if your credit score would qualify you for a loan. 

Especially in this crazy time we’re living in, have a conversation can only help. Banks and lenders appear to want to help, and allowing them to get to know you a little bit before recommending a solution can only help!

Prove You can Pay the Loan Back

Lenders want to know you can repay the amount extended in full, as well as any interest accrued before they offer you a loan. The amount they extend to you usually depends on whether or not you’re able to pay them back. Shockingly 45% of Americans say they have nothing saved in their accounts, so that’s probably not a good look for your chances of getting a loan.

If you don’t have anything in savings or proof of income, you might find it more difficult to get a loan. Try to offer proof of income or have a cosigner’s support. A cosigner is someone who guarantees the debt will get paid off. Proof you can repay the loan will soothe a lender’s fears. As a result, they’ll become more likely to accept your loan.

If you as the borrower fails to make payments, the creditor will turn to your cosigner to collect the money you own. Your cosigner will need a good credit score and credit history. If you need a cosigner for approval, make sure they can provide the creditor with proof of income, too. 

Explore Different Lenders

Only apply for loans from lenders you trust. Make sure to research their lending standards, too. You’ll want to make sure you feel confident you can meet those standards before applying. Even if your credit or financial situation isn’t perfect doesn’t mean you have to work with a sleazy lender.

Take the time to explore different options before you start applying for loans. There’s a ton of good info online, including at the Better Business Bureau.

Consider Loan Types

There are also different loans you can choose from. For example, personal loans are offered by banks or financial institutions. These loans are often paid back in monthly installments. 

A secured personal loan is one of the most common types available. They’re ideal for car payments or your mortgage. When you borrow money through a secured personal loan, you’re securing the amount borrowed with one of your assets, i.e. the asset (your car or home) will become collateral if you can’t repay the loan.

There are also unsecured personal loans, which aren’t backed by collateral. These loans put the lender at risk, which means you’re less likely to get approval if you have bad credit.

Other loans include payday loans and peer-to-peer lending. You can speak with someone at your bank to determine which type of loans is best for your situation. I’ve lent money with decent success through LendingClub for a few years now.

Beware of Scams

There are many online lenders who promise getting loans with bad credit is easy. Remain wary of these potential scams.

Instead, contact your state’s Department of Banking or Department of Financial Regulation. They can tell you if a lender is registered to do business in the state. You can check the Better Business Bureau to see if any customers had a negative experience with the lender, too. 

In summary, in this difficult time, you may find yourself needing a little financial assistance. Do your research before working with any lenders, try to better improve your own financial situation (if able to), and have a real conversation with your local bank! Doing so can help you get the help you need to get through this mess!

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