You may see commercials across the financial industry that use the word “guaranteed.” It is a comforting word for consumers to hear because it removes inhibition and pushes hesitant shoppers toward applying for loans. However, the truth is that guarantees are often imaginary in the world of consumer finance.
Guarantees are hard to give when customers can have such a wide range of circumstances. For example, customers could have no credit and very little income. Another customer could have a decent income, but a credit score below 500. Yet another customer could already have multiple personal loans to their name and their credit utilization is maxed out.
Think about this issue from the lender’s perspective. Each borrower represents a certain amount of risk. Each lender has a limit on how much risk they will absorb. If a customer’s particular situation is deemed too risky, well, the lender will be forced to deny the loan.
That said, guaranteed installment loans may not exist, but there are lenders, like Simple Fast Loans, who are flexible with their approvals.
Terms and requirements will vary from lender to lender, and even from state to state, but a few basic necessities will be:
Now, lenders will likely be flexible in two out of three areas, but rarely will they be flexible in all three. For example, as we alluded to above, if you have an average credit score that might make up for not having a very active checking account. Or, you may see lenders approve you if you have a consistent income source like a regular 9-to-5 job, but your credit history is light.
Flexible lenders are willing to look at all the different aspects of your situation, and this can make an installment loan getting approved almost a “guarantee.”
If an installment loan lender does deem you too risky based on your credit score, there are some ways to improve your credit score.
The first thing you need to do is make sure you are paying your bills on time. Payment history is a huge factor in your score. Another tip is to make more frequent payments. For example, if your credit cards are high, consider making additional payments after you make your monthly payment. This will lower your balance and raise your credit utilization. Last, we recommend looking through your credit report and disputing any errors. It is in your best interest to dispute and remove any errors from your credit report. Any negative errors could be dragging your score down. The credit bureaus are required by law to investigate and respond to errors.
If you follow those three recommendations, you might be able to add 50-100 points to your credit score. If you can raise your credit score, it could be a decisive factor in getting approved for that installment loan.
So, while guaranteed installment loans are mostly a myth, there are lenders out there that have extremely high approval rates.
Some lenders boast above 90% approval rates. This is because they are flexible about requirements and they will work with borrowers on a case-by-case basis. Of course, interest rates and terms will also vary from case to case.
This latter point is important to consider. Getting approved is only half the battle. You could get approved for that installment loan, but you may be in over your head when it comes to paying it back plus interest.
So, before you sign your name on the dotted line for that installment loan, make sure you understand all the terms and that you can afford that monthly payment. Lenders will be stretching the numbers to get you approved, so make you can do your part and make the payments on time.
A guaranteed installment loan is not possible for every person. However, there are plenty of lenders who are willing to work with a variety of circumstances. This case-by-case approval process can be almost as good as a “guarantee.”
However, it may be best for potential borrowers to examine their credit scores. Make sure it shows on time payments, frequent payments where possible, and address any errors. A solid credit score can make a big difference if you are on the border of not being approved.