There is no such thing as a guaranteed loan. Not because our fine work in maintaining a good credit rating in these tricky financial times is ignored, but rather in every loan application, there is criteria that must be met. So, there can be little surprise that applying for unsecured loans with bad credit means ensuring the lender can tick all the essential boxes.
What might be surprising, however, is that ensuring those boxes are ticked is not as difficult as it might seem. For even unsecured loans with poor credit, there is a list of quite straight forward criteria ranging from proof of identification to proof of income, and a basic confirmation that the amount of income is enough to handle the loan.
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There was a time when it was practically impossible to get loans approved without security, but in the modern era, when bad credit is so common place, there is less stigma associated with the status.
Why Criteria Exists
It may seem unfair that criteria can prevent an honest applicant from getting approval on an unsecured loan with poor credit. But in many ways a rejection is a good thing. Many of us believe we can meet our obligations, but when it comes down to it, the challenge can become too great.
Lenders actually calculate beyond the existing figures, taking into account the likelihood of future expenses. For example, a recently married couple is likely to start a family, something that can be very expensive. So, the chances of being able to maintain a monthly repayments of $1,200 on a unsecured loan over 10 years might be a big ask when just $1,500 of their monthly income is free.
For this reason, loans with bad credit, approved without security are subject to a conservative thumbs up.
The Most Common Criteria from Lenders
The core point to criteria is that the chances of seeing their loans defaulted upon are kept to an absolute minimum. For unsecured loans with bad credit there are some basic and common criteria to expect, both from traditional lenders and the modern online lenders so popular today.
The first of these is proof of age, with financial regulations making it illegal for individuals under the age of 18 from entering into any kind of legal financial agreement. Needless to say, this covers unsecured loans with poor credit too. So all applicants for a loan must prove they are over the age of 18.
The second is proof of employment, where the applicant can produce documentation that confirms their job, employer and the period they have been employed for. Most lenders require proof of full-time employment from the same employer for at least 6 months, and need income to be confirmed.
Finally, getting loans approved without security also requires proof of citizenship. Only US citizens and legally long-term resident foreigners are entitled to apply for a loan. This is to ensure the borrower cannot simply return home, or be deported, without having repaid their debt.
Other Factors that are Considered
It is often thought that a low credit score is enough to end any chances of getting a loan, but since it is possible to get unsecured loans with bad credit, that claim can be discredited.
The truth is that low credit scores effectively dictate the interest rate that is charged, but of far greater influence over unsecured loans is the debt-to-income ratio.
The ratio of 40:60 shows that there is enough disposable income to cover the cost of the loan, and deal with unexpected expenses too. Getting the documentation in order is key to getting those boxes ticked, which can then mean seeing loans approved without security.
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