Advice on Getting a Personal Unsecured Loan

Author: James Copper

Getting an unsecured loan is one of the most difficult loans to
get. An unsecured loan is very risky for a lender, so they often
try to get a borrower to try a secured loan instead. For some
borrowers, a secured loan is not an option because they simply
do not have anything to offer as collateral. That is when an
unsecured loan becomes necessary.

When it comes to unsecured loans, lenders are very cautious. An
unsecured loan is solely based upon the borrowers word that they
will pay back the loan amount. Unlike a secured loan, the lender
has nothing to fall back on if the borrower defaults on their
loan payments.

Unsecured loans are usually for lower amounts than secured
loans. Lenders usually have stiffer requirements for borrowers
for unsecured loans, as well. Lenders prefer higher credit
scores. They will also be very particular about verifying income
and comparing the debt to income ratio of the borrower. The
lender is going to make absolutely sure that the borrower can
afford the loan.

In some cases, lenders will not even consider giving an
unsecured loan to a borrower who does not have a co-signer. By
getting a co-signer, the lender then has two people to hold
responsible for the loan. If the primary borrower defaults the
co-signer then becomes responsible for the loan.

A borrower wanting to get an unsecured loan needs to make sure
they have their finances in good order before applying. They
should look over their credit report to see if there are any
errors or any problems. If they have collections or other bad
reports on their record then they need to try to fix them. At
minimum they should have at least one account in good standing
that is over 6 months old. They should also not have excessive
collection accounts. A credit score of over 650 is desirable.
Additionally, they should go over their budget and make sure
they can afford the loan.

A lender is unlikely to offer an unsecured loan to anyone who
has credit problems or to someone who has financial
difficulties, no steady employment or a history of unemployment.
They are wanting proof that you have a history of always paying
back your debts. Even one bad mark could be too much for some
lenders. If you need the loan, but do not meet the requirements
then you will need to find someone to co-sign on the loan for
you.

Unsecured loans are a huge risk that many lenders try to avoid.
Borrowers will find that they are likely to get offered a
secured loan first and then only offered an unsecured loan if
they can not come up with collateral and can meet the lenders
strict requirements. Lenders are not going to take any chances
by offering unsecured loans to someone who is not financial
stable. If you have a good credit record and a good financial
background then you will probably be able to qualify for an
unsecured loan.

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