Bad Credit Loan Approval

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Loans are difficult to receive. When there’s a bad credit score, it’s even worse. If money is tight, there is no choice left other than a loan at times. However, a bad credit score can deter the loaners.

Most loans go through a similar approval process. Certain paperwork must be done and turned in. Then the representative will submit everything – loan application and all – to the underwriter, or the person who makes the first decision. The underwriter returns the loan with one of four possibilities: approved, approved with conditions, suspended (needs more documentation before it can be approved or denied), or denied.

Once the possibility has been given, it’s usually approved with conditions. This means that there is a set of conditions that must be satisfied before the locking of the interest rate and terms. Afterwards, the loan is closed and it’s the loaner’s issue now.

Should the loan be denied, there are other options for the loan. One idea is to get a loan from a family member or friend. However, be careful and only use this as a last resort. Create a written document to make sure that there are no misunderstandings that could ruin the relationship later on.

Another idea is to go for a co-signer. This usually gives a bad credit score a little more credibility. Be careful about who co-signs. If the person who takes out the loan cannot pay it, the co-signer will be asked for the full payment. Be ready to keep the side of the bargain.

However, there is cause for caution. Those with bad credit will have cause to look into all loan options if they’re desperate. If there are reasons to doubt, there are signs to tip anyone off that a loan offer is a scam.

One thing to keep in mind is how a loan offering discloses fees. A professional company always gives the fees upfront; if the fees are not clearly stated before the loan is given, walk away – especially if the person simply says it’s for “paperwork”, “insurance”, or “processing”. These are not real lender charges – those are application, appraisal, and credit report fees.

Another thing to keep a look out for is a loan by phone. This is simply illegal. Walk away (or hang up and don’t answer again) if they ask for a payment beforehand and promise a loan or credit card over the phone.

Other things to look out for is being asked to pay to an individual, wire money, no interest in credit history, or a copy-cat or want to be name. Whatever is done when bad credit is there, always be on the look out.