Steps to Get an Unsecured Personal Loan
Only three steps are required,Checking your credit, getting pre-qualified and comparing credit options.
Unsecured personal loan means the lenders don’t take a collateral as a must.The amounts vary from $500 and up to $100,000.A personal loan can help cover your unexpected cost such as paying back consolidation debt, house re-decoration or even medical care.Moreover, the payback policy is flexible.Your credit score will be taking into consideration when decide the rates and terms, but normally over two to five years.
Step 1 Credit Score Checking
It is free to check your own credit report.Generally scores are divided in to 4 levels,
720 and higher: Excellent credit
690-719: Good credit
630-689: Fair or average credit
300-629: Bad credit
Of course, good credit report can help you get qualification for personal loans with lower interest rate and better payment term.However, if your credit score is unacceptable at this moment, don’t worry, there are still things you can do to build it up before apply.On-time payments is the biggest element that helps you get higher score.Then following the amount of credit you use relative to credit limits. Last but not the least, go through your report carefully and disclose any possible mistake.
How to build better credit score?
The following several simple steps is your route:
Reduce credit balances.
Pay every bill on time.
Check credit reports for mistakes and fix them.
Step 2 Soft Credit Check（Pre-qualification)
Pre-qualifying is also called a soft credit check, it is an act performs by the lenders and it won’t affect your credit report.Check it out before you apply a personal loan officially.It is a win-win choice.
You may find the following information is required when asking for pre-qualifying:
Personal Information, include
Date of Birth, Address(current and previous), email, phone number, Academic background( college name and major) and Social Security number
Professional Background, include Employer’s name, work address and phone number, and Income
Financial Situation, include rent, student loans, and other loans.
If you are denied during pre-qualification process by the lender, reasons may be
Small amount of income
lack of working history
A high debt-to-income ratio. below 20% is considered excellent
too many load or credit card related inquiries.
Step 3 Compare personal loans
After you pass the soft credit check, you should move to next step.
What should you compare then? Amount, payback terms and interests rate are the most important factors you should pay attention to.
Online lenders usually offer lower interest rates and better payback terms, especially for borrowers with bad credit.
Besides personal loans, credit card is your most cost-effective option, as it has 0% interest on purchases for a long period, like a year or more. If you are qualified for a 0%, don’t hesitate to apply one.
If your credit is not good enough for a unsecured loan with low interest rate, you can consider a secured loan with collateral, such as car, house or saving account.
There is another choice for less qualified borrowers, A co-signed personal loan. Both the borrower and the co-signer’s credit history will be taking into consideration by the lender when approve a loan and offer a better term.
You will find the best match after you compared the lenders by following our guidelines, then you will need some documents to apply a personal loan formally:
Identification: passport, driver’s license, state ID or Social Security card
Verification of address: utility bills or copy of lease
Proof of income: W-2 forms, pay stubs, bank statements or tax returns
Then the lender will run the had credit check. After the final approval, funds will be in your account within a week(time differs on lenders terms)