How to get approved for a loan with bad credit? I know, i know. Everyone tells you "You need good credit and a down payment in order to get approved for a loan". Well, that is not necessarily true if you know exactly where to look and what to say when you get there.
I'm going to tell you how. Let's go. So, when it comes to getting approved for a loan, many of you guys already know there is a process. Usually, go to a bank, you fill out an application, they ask you for all of these different documents.
And then you will provide them to and they will either approve or decline the loan. But in many cases, we already know they're looking for someone with good credit, good employment, good income, and good assets. We may not necessarily know what good means but we know that they are looking for something good. And if we have bad credit or a bad situation, they are probably not going to lend to us.
That is the case in most situations. Because what a bank is looking for is to see if you're going to be able to repay the loan. As we know, as a former vp out of bank, they are looking for people that are going to pay them interest. And the only way to get the interest is if people continuously make their payments.
So, when someone is looking and pulling your credit to see if you are a good credit fit, they are looking to see if you have the capacity and the willingness to pay the loan back. And so, what we will do is look at your personal credit report to see if you've paid other people well. And if you have, then potentially they will lend you money. This is how the process works and this is what they're looking for.
But this can be very tedious for people because like I said, we don't necessarily know what good means. We may know that we have bad credit or we don't have good assets or we don't have good income. But we don't necessarily know what they want. So, I'm going to share with you some secrets on exactly what they're looking for and how to show them exactly what they want to see.
So, when I worked in banking, I worked as an underwriter at one point. And that is basically the person that approved or denied a mortgage loan. It was a very boring job for me but I got to look at a lot of people's files. I got to look at a lot of credit reports.
I got to look at a lot of pay stubs, tax returns, assets, bank statements and things like that to see if I thought this person met our company, our bank's guidelines, and if I should approve the loan. We were taught something called the 5 C's of lending. And the 5 C stands for collateral, capacity, credit, character, and conditions. Those are the 5 c's that they are looking for and I'll quickly break down what those mean and why they look at your credit report and why bad credit could hurt you.
So, one of the things, like I said they're looking for is your credit. They want to see how well you have paid other people because to a lender, this is an indication of how well you will pay them in the future. So, they'll look through your credit report to kind of see, "Hey, has this person paid other people? Are they the type of person that paid people back? Are they the type of person that doesn't pay people back? " But that's not the only thing that they're looking for. Like I said they're looking at your capacity.
Are you able to pay this loan back? Do you have the capacity to pay the loan back? Do you have a job for example, okay? So, that is where the employment is going to come in, they want to make sure that you are employed in a stable way whether it be employed by someone else in a stable way or you have a stable business that is providing you income. They're going to make sure you have the capacity to pay them back. The next thing they want to know is what is your character. Again, that goes back to the credit report.
Do you have the character? Are you someone that usually pays people back, alright? They want to make sure you're usually the type of person that pays people back and that has been your history. The next thing of course is the collateral. So, in some cases, they require collateral. Collateral means the thing that secures the loan.
So, using for example a mortgage, a mortgage loan is collateralized by a house, okay? The house is the collateral for the mortgage loan. So, if you don't pay the mortgage, they take the house back. The house is the collateral. It's a very simple process.
But in some cases, if you're doing like a personal loan where you don't have any collateral, there's no collateral. You're just saying, "I usually pay people. Loan me some money. I promise you I'll pay you back.
" Okay? That is a loan that has no collateral. But in most cases, there are loans that have collateral like auto loans and mortgages. They usually want to collateralize it against something in case you don't pay. And then last but not least is conditions.
Under what conditions are you asking this money? Are you asking for all of the money to buy the home? (for example). Are you asking for 100% of the home's value? Or are you going to put down a down payment and only take 90% of its value or 80% of its value? They want to know the conditions. Like under what conditions are you asking for a loan or are they approving your loan. Are they approving you for loan for 30 years, for 20 years, for 10 years.
Do you have to pay them monthly? Do you have to pay them weekly? Do you have to pay them daily? The conditions of the loan. The conditions that you want they are looking at to see if that meets their guideline. And sometimes, they will approve you but they will change the terms. So, you may ask for a hundred thousand dollars and they may say, "No.
I'm not loaning you $100, 000 but I'll lend you 70, 000. " Okay? That still works but that is a counteroffer to what you requested. So, that is simply how the mortgage in the loan process works. Just to give you some examples.
So, now let me tell you how you navigate through that process now that you understand it. So, now let's talk about if you have bad credit. Because that's really what this is about. So, if you have good credit and stable employment and lots of income, you're probably going to be able to get approved for loans pretty easily especially if you have a good credit score.
But let's talk about what do you do if you have bad credit, okay? Because that's what we're talking about and I used to be there I had terrible credit when I started. But we need to know what are you defining as bad credit. In my situation, I have filed bankruptcy and I have multiple foreclosures on my credit report. I had a very low credit score because of those things.
Unfortunately, I had borrowed money and I hadn't paid it back. I had bad credit. Do you have bad credit because you don't pay people back? Or do you have bad credit because you pay people late? do you pay them late but you always still make the payments? Do you have evictions? Do you have foreclosures? Do you have repossessions? Like how bad is the credit? That really makes a difference here, guys. But the key to this is we've got to determine what is your bad credit.
So, in order to do that, you're going to have to pull your credit report. Step 1 is going to be for you to pull your credit report. I need you to pull it. You can get it absolutely free at annualcreditreport.
com. And go through your trade lines and see what is on your credit report. Do you have late payments? Do you have low payments? You have slow pay? Sometimes you pay them on time then sometimes you pay them late. Did you let your car go back? Did you let your house go back? Did you get evicted? What happened? What is on your credit report making it bad because that will determine which direction that we go in.
But step one for you, you need to know what do you mean by bad credit, okay? And then you'll know how to navigate through the next steps that I'm telling you. Okay. So now that you have seen your credit report and you kind of know what's up there, let's talk about how you get approved for this loan with the bad credit. My suggestion quite frankly depending on if you don't have a bankruptcy or an eviction or those type of public records type of judgments, my suggestion is that you should spend a couple of bucks and just get credit repair or credit restoration.
Again, Noelle does not do that but I have invested in that. And it has changed my profile, okay? And I suggest you do the same. If you have a situation where you just have some late payments or your credit cards are a little bit too close to the limit and those are some of the reasons why you have some bad credit, you could easily get that credit score fixed quickly with a professional company. I'll put a link below to a company that I've used before.
Again, not sponsored. I'm not being paid any money. A company called Creative Credit Solutions. They're based out of Texas and I know the owner of the company.
So, that is a company that has helped me and lots of my students. Now, if you have a situation though where you do have the situation that Noelle had and you have foreclosures and you have bankruptcies and you have all this other stuff, you're going to have to do something else. You're going to have to do the credit restoration but I'm going to give you another thing that you should do because your situation is a little bit more dire. So, if you have terrible credit like I did, what you want to do is start taking a whole different focus.
You want to invest in the credit restoration. Again, I gave you the link below. But if you want to get approved for a loan or there's something that you are looking to get, for example, you're looking to get a car or you're looking to get a house, okay? And you want to get a loan in order to do those things, I suggest a different route. You can literally use business credit in order to get those things.
I have purchased homes in my businesses' names. I've purchased cars in my businesses' name. I have business loans, business lines of credit, business credit cards. You name it, I got it, okay? And this is probably going to be the best situation for you.
And this is actually a mistake that I made. I waited way too long to do this. If you have bad personal credit, do step one that I told you. Get some credit repair.
But if you don't ever want to have this issue again, start working on your business credit. You can quickly get out of the situation where you never have to rely on personal credit ever again by building a solid business credit profile and start putting everything in your business's name. You could do this whether you are a full-time entrepreneur or whether you are not a full-time entrepreneur. You can start this even if you have a job right now or if you're unemployed.
This works either way, alright? I've made an entire video on how to set up your business credit. I'll put a link you know somewhere and you make sure you watch that entire video. That is going to be the game-changer if you have terrible credit. And this will be a situation where you can get a car or a house really quickly without having to go through all of the steps.
And it will solve the problem where you never have to worry about your bad personal credit ever again. So, there you have it. Additionally, I've created an entire course absolutely free that I want to make sure that you check out. Go to noellesfreetraining.
com. It's a complete training that I've made that teaches you my exact formula for investing without losing money. I've literally made millions and so have my students. I want to make sure that you have all of the access to that absolutely free.
So, please check it out at noellesfreetraining. com. I want to make sure that you have all of that resources, all of the knowledge, and all of the information that you need to be successful. This is Noelle.
To your success.