Lending Criteria for Loans with Poor Credit
In a perfect world, we would all get the loans and be able to repay them back in required time. However, some of us have poor credit backgrounds and getting a loan is almost impossible. But did you know that whether you have good credit or poor credit, the criteria for a loan is basically the same. The real difference is going to be the rate and term. Another variation is that you are also going to be required to provide additional and more comprehensive documentation. Having poor credit and getting a loan will just demand more preparation and documentation to support your case.
Poor Credit Loan Documentation Criteria
Whether you are asking for $1000, $30,000 or $50,000 with poor credit, start collecting the documents. Here are some examples of the criteria and documentation you are going to need to apply for a loan with a poor credit background:
- Pay Stubs – you are going to need to provide at least the last 30 days of pay stubs. Four consecutive weeks of work will typically satisfy the employment criteria for your lender.
- Tax Returns – you are going to need to make available the last two years of your tax returns. Tax returns will be evidence of employment as well.
- Drivers License or State ID
- Social Security Card
- References – you will need at least three references with their name, address, and phone number, the lender.
- will most likely verify them so make sure they are accurate
- Bank Statements – you will need three months worth of bank statements. Contact your bank for old statements in advance. If you have an online bank account, 6 months of statements are usually available.
- Collateral – Banks and other lending institutions want something in exchange for a loan in case you default. By giving collateral such as your home, car title, motorcycle, or boat, you increase your likelihood of getting a loan with poor credit.
- Bankruptcy Papers – you need to show your bankruptcy discharge papers, if applicable.
- Letter(s) of Explanation – you may be required to offer in writing letters of explanation on why your credit is less than perfect
One thing you will need to keep in mind is that you need to be honest with the lender. If your credit is poor because you took on too much, then tell them that. Bluffing your way through an application will only get you denied. At this point your credit scores is not what they are basing their decision on; it is you, what happened, and the collateral you can offer. Remember you are providing the lender with needed documentation for a poor credit loan.
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