How to Get Loans Even With Weak or No Credit
Can you really get started in your own business or income real estate with weak credit? The answer is an astounding yes. You can and here’s how!
Lenders generally take a cautious approach to first-time borrowers and borrowers with weak credit. Without a credit history to go on or an acceptable credit score it’s not unusual for them to require a co-signer before they hand over a check.
A cosigner is a person who can legally sign loan papers or documentation with another person who is having difficulty obtaining a loan, or sometimes getting a lease for an apartment or rental unit. As a cosigner, the person makes a legal agreement to be jointly responsible for repayment of the loan should the first signer fail to pay debts.
Co-signers typically will have well-established credit to help the borrower qualify for the loan. Get a family member, business associate, or friend with a good credit rating to cosign for you. To make it more attractive to your cosigner, you can offer a small portion of the income from the business or real estate to your cosigner. You also can get a person with a strong credit rating to cosign for you by paying an agreed-on fee to the cosigner. By advertising in your local weekly newspapers, Internet, and in other publications read by business people, you can find cosigners that are established business firms.
Here are some other things you must do increase your chance of getting a loan if you have weak or no credit:
Take action when you know your credit score is below the minimum required by lenders you plan applying to.
Look for one or more cosigners to make your loan application more acceptable to your lender.
List collateral you can offer to your lender so they feel safer when approving loan application.
Make a friend of your loan officer so she understands your business or real estate deal better and can be a supporter for you when your loan application is being reviewed by the lender’s Loan Committee. Having a loan officer as a friend can mean the difference between getting and not getting a loan.
Be certain that your loan application is typed throughout and that all questions on the application are answered. Be sure to sign your application in the space provided. If your lender wants your loan application submitted online, send it in by e-mail. If you’re not a computer user, have someone who knows computers submit your loan application for you. Most computer people will be happy to do it for free.
Make sure to have a business plan to submit with your loan application that gives a blue print of what you are going to with the money. The business plan should be about two pages.
Accept your lender’s loan offer if you can earn a profit while paying the Principal and Interest (P&I) on your loan. You can always ask for a lower interest rate after you’ve made at least six on-time P&I payments to your lender. Your credit score will be higher and they’ll be happy to negotiate a lower interest rate.
Once you get a cosigner who helps you acquire your business or income real estate, you can work on improving your own credit rating. Your credit will greatly improve when you make your loan payments on time. Soon you won’t need a cosigner; you’ll do all your deals on your own!
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