What is a Bad Debt Personal Loan and How Can I Qualify? 3 Tips

We have all had the fantasy at one time or another in our lives of growing a money tree in our backyard or finding the goose that lays golden eggs. Of course, once we snap out of our daydream we remember the hard truth that the only legitimate way to actually get access money is to earn it or borrow it.

Of course, even borrowing money means you have to earn it, in a way. That is because you need to earn the right to borrow money by building up a track record of being someone who is creditworthy. This track record is expressed in the form of your FICO, or credit score.

The credit scoring system is the most fair-and-balanced way that financial companies have come up with to date to judge a person’s creditworthiness. Still, unfortunately it is not a perfect system. In fact, you could be someone who is basically an excellent candidate for a loan borrower but who, due to a series of bad-luck events, now has a low credit score.

One way that otherwise financially solid people wind up with a low credit score is by accruing a lot of bad debt, such as credit card debt.
If you have a lot of bad debt but are interested in taking out a personal loan, here are 3 tips on how to qualify for a bad debt personal loan:

1. Choose to borrow a reasonable amount:

Start by getting a handle on how much you should borrow with your personal loan. Borrowing too little will mean you will end up right back where you are now: in need of cash. However, it is also a mistake to borrow too much, as the interest you end up paying will be higher than necessary.

2. Become very familiar with your credit report:

Make no mistake that, even when working with bad credit personal loan lenders who specialize in working with people in your situation, they will still have a look at your credit score. Therefore, before you start applying to lenders, make sure you order copies of your report from TransUnion, Experian and Equifax. Then, take notes on any errors or glitches in any of those reports and be sure to get them corrected. At the same time, be ready to explain any other unflattering items that show up in your report, since a lender may ask about them.

3. Widen the playing field by applying to more than 3 bad debt personal loan lenders:

It is the typical experience for people looking for a bad debt personal loan to apply to one or two lenders, get a loan offer, and accept that offer immediately. But a better approach is to start with a list of multiple lenders, then applying to all of them. Make sure to apply to all 3-5 lenders on your list, as doing so will greatly increase your chances of getting a low interest rate.

Follow these 3 tips for qualifying for a bad debt personal loan. By taking the time to do your homework and applying to multiple lenders, you can land the best interest rate and get quick approval.