Many times, people may fail to get a loan approval on their own. In such situations, a co – signer can help in getting the loan.
How co – signors help in getting loans approved
Lenders generally grant loans after evaluating the capability of the borrower to repay the amount borrowed. This is usually done by taking into consideration the following two factors:
- The credit score of the borrower.
- Evaluation of the income earned by the borrower as it defines his capability to make repayments of the loan.
If the borrower has a bad credit score or insufficient income, lenders may refuse to give the loan. In such situations, loans may be approved with the help of co – signers. A co – signer agrees to make full payment of the loan in case the borrower fails to do so. This offers double security to the lenders as they can recover the unpaid amount of the loan from two people.
Tips to get loans approved without a co – signor
Co – signers can help people who have bad credit get a loan. However, finding a co – signer is not easy. Many people shy away from taking responsibility of a loan. The following tips can help borrowers get loan approved without a co – signer:
Improving the credit score
Can you get a loan with bad credit and no co-signer? The answer is yes. Borrowers may start with improving their credit score. By making regular and timely repayments, borrowers can improve their credit. The credit score can also be improved by paying off past debts. The process may take a little time, but proves to be fruitful in the long run.
Correcting erroneous credit reports
Many times, errors in credit reports of borrowers may decrease their chances of getting a loan. By fixing such errors, borrowers can improve their chances of getting a loan even without a co – signer.
Adding income and collaterals
Lenders calculate the debt income ratio of borrowers while granting loans to them. The ratio can be improved by adding more income sources. This can improve the chances of getting a loan as the repayment capacity of the borrower increases. The chances of getting a loan can also be improved by pledging collateral against a loan.
Apply for a lesser loan
People who have bad credit and no co -signers may apply for loans of a smaller amount. Borrowers may apply for loans of amounts which improve their debt income ratio.
Searching for options
If one lender refuses to give a loan, it is advisable for borrowers to search for other options before coming to a conclusion. There are many online lenders, who may be approached for a loan.
People with bad credit often face a lot of difficulties in getting loans. However, there are numerous ways in which they may get the loans approved.