If you have a bad credit score but want to borrow some money, we suggest you look into a guarantor loan. However, it can be difficult to obtain one even if you have a guarantor. You cannot say for sure that you will get the loan. Here are some tips that can help you increase your chances of getting the loan.
find a good guarantor
Keep in mind that the guarantor will work as an extra guarantee for the bank. If the primary borrower is unable to make the payments, the bank will ask the guarantor to make the payments. Therefore, you may want to make sure that the guarantor has a good credit rating.
make payments on time
Remember: if you have a guarantor, it does not mean that you can get the loan no matter what. The bank will continue to look at your credit score to get an idea of whether you can repay the loan in a timely manner. Actually, the amount should be within 1/10 of your monthly salary. This will help the bank to make the deal.
Know the risks
We suggest that you inform the guarantor of the related risks and liabilities. Who can be the guarantor? The guarantor can be anyone, such as your friend, parent, sibling, or someone else.
apply directly
If you are getting your loan through a broker, you may have to pay additional service fees. You don’t want to pay unnecessary expenses. What you may want to do is go directly to the lender to avoid the additional fees.
Choose the lender carefully
There is no doubt that you should not choose just any lender. It’s a good idea to ask for quotes from several lenders. This will help you choose the best lender to apply for a loan from. Even if you have poor credit, your guarantor will give you the opportunity to borrow from the lender.
understand the consequences
You may want to keep in mind that if you default on the loan, your credit rating will suffer. The full burden will not fall on you because you have a guarantor involved, but the rating will be reflected in your documents. If you already have bad credit, it will make it more difficult for you to get a loan in the future. Apart from this, it will be even more difficult for you to find a good guarantor.
Keep in contact
We suggest that you keep your guarantor informed of any problems you are having with making payments. In fact, the guarantor and the lender will appreciate it if you let them know about any problems you may have. They can help you deal with problems.
Simply put, these aren’t the only things to consider when applying for a home equity loan. You may find other attractive offers depending on the circumstances you find yourself in. What you may want to do is review the terms and conditions thoroughly before signing the documents.