Approval for bruised credit applicants
Credit score and history are key factors that financial institutions look into when reviewing a loan application. If your credit report shows huge credit card balances, delayed payments, excessive credit enquiries in recent history, foreclosure and bankruptcy, then you are more than likely to experience a loan rejection.
If you have a bad credit score and have been rejected by traditional lenders, then Banyan Venture Partners can help. We are mortgage brokers with a stellar reputation across Canada. Whether you are looking for a personal loan, or a home, business or vehicle loan, we can help you find the right private money lenders.
If you need a loan badly but are apprehensive because of your bad credit, here are some things you could do to immediately increase your chances of getting a loan.
Increase your Down Payment
Lenders assess loan risk through the Loan to Value (LTV) ratio. This ratio estimates the risk by comparing the loan size with the value of the property against which the loan is being taken. A higher LVT value is an indicator of high risk and usually leads to loan rejection.
The risk is reduced when you make a large down payment.
With a large down payment, you’ll have to borrow far less, and consequently, your monthly repayments will be smaller.
This reduces the risk for lenders and they might be more open to approving your loan even if you have a bad credit score.
Offer a Collateral
Offer the lender something valuable as collateral to increase your chances of loan approval. However, be aware of the risks involved in this approach.
In case of non-payment, your property could end up being foreclosed or your vehicle could be taken up in repossession by the lender.
Use this approach only for highly substantial purposes.
Add a Consigner to Your Loan Application
A consigner is a person who agrees to apply for a loan along with you so you get your loan approved on the strength of this combined financial profile. The prospective consigner must have a credit history stronger than yours.
The consigner will be made responsible for making loan payments along with you. In case of a failure, the lender will hold both the consigner and you responsible, which can impact the credit history of the consigner.
It is crucial that the person consigner is aware of these risks.
Take a Loan from a Private Lender
If you have a bruised credit, you may have a hard time getting a loan approved from traditional lenders. Your chances of getting a loan are greater with private money lenders.
This is because private lenders give more importance to the value of the property being mortgaged in comparison to the loan amount than to your credit history.
With private lenders, the loan closing schedule tends to be shorter. Your application is approved quickly and the terms are more lenient than that of traditional lenders.
Banyan Lending Partners can connect you with the right private money lenders. Contact us today for more information.