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There are two different types of personal funding options to choose from: secured and unsecured. Both have their merits, but an unsecured credit line can give you the financial freedom you need to meet goals without putting your assets and peace of mind at risk. Before we begin learning about how to qualify for an unsecured personal loan, let’s first differentiate between the two options:
1. SECURED – Secured financing is typically for consumers and/or businesses that have poor or fair credit, or at least have plenty of property to put up for collateral. When borrowers don’t qualify for an unsecured credit line, they must opt for a secured option that requires the loan to be backed by the value of a car, a savings account, a certificate of deposit, or another treasured asset.
The starting interest rate on secured personal loans with adequate collateral are typically lower than the APRs on unsecured options without it. If you fail to make payments on time or default in any way, however, a secured loan agreement gives the lender permission to seize the collateral without a court order.
2. UNSECURED – On the other hand, unsecured financing options require zero collateral backing and are usually given to consumers and/or businesses with excellent credit. Since nothing is used to secure the borrower’s repayment promise, the interest rates on these types of loans and credit cards are usually higher than they are on secured lines of credit.
An unsecured loan is one that gets issued and supported by only the borrower’s creditworthiness. Therefore, it’s important to improve your credit score before applying to ensure you don’t get denied and rack up hard inquiries on your report. Also known as a signature loan, unsecured personal funding typically requires a credit score of 650 or better to get approved by most lenders.
Unsecured financing can provide the money needed to do many things, but it’s impossible to get qualified for a line of credit if you’re not ready for the responsibility or unaware of what creditors look for during the underwriting process.
The 4 Most Important Steps to Getting an Unsecured Credit Line
To take advantage of an unsecured personal loan, it’s important that you accept the money only when your creditworthiness can support the duty to repay. Irresponsible credit line use affects everybody because it urges lenders to increase interest rates, charge annual fees, and become more stringent about their eligibility requirements. On a personal note, opening a new revolving line of credit without the financial security to back it up may ruin your credit scores and make you ineligible to get an unsecured credit line in the future.
Keep your credit report intact and improve your creditworthiness while enjoying the freedom of fast personal funding by following these easy steps:
STEP ONE: Have Your Credit Report Analyzed
It’s difficult, if not impossible, to tell whether your credit score is compatible with an unsecured credit line if you haven’t looked at it in a while. Furthermore, most consumers have little to no idea what creditors want to see on a borrower’s report. Also, the presence of fraudulent activity and/or misinformation is an important thing to spot before you start requesting money based on your creditworthiness. Thus, it’s always a good idea to have your credit report analyzed by a professional prior to applying for any type of unsecured financing.
· TIP: A good credit repair company will offer a comprehensive credit analysis for free and with no obligation to purchase additional services.
STEP TWO: Get the Negative Items Removed Quickly
Once you’ve completed the first step, it’s much easier to have the negative items removed from your credit report in preparation for receiving personal funding. While the process may take several weeks, having patience and practicing due diligence with this step can improve your credit scores significantly and help you lock in lower interest rates on loans. Especially if you’ve been the victim of identity theft, having negative items deleted from your report is both wise and highly recommended for security purposes.
· FACT: Identity theft affects more than 15 million consumers per year, and many of them don’t even realize it’s happened until they apply for financing and get denied.
STEP THREE: Delete All Hard Inquiries from Your Last Attempt
Many times, consumers apply for an unsecured credit line without first being prepared. While some people have luck and get approved, those who don’t receive only additional hard inquiries on their credit report and a subsequently lowered credit score. Even those who are approved will see an increased number of credit pulls on their report, and both situations can make it difficult to get personal funding later on. Therefore, one of the most essential steps to follow when applying for unsecured loans is hiring an expert to dispute the inquiries on your behalf.
· HINT: The best company will be able to remove hard inquiries from your credit report within about 6 to 8 weeks.
STEP FOUR: Apply with a Variety of Lenders
Even with impeccable credit, not all lenders are willing to extend an unsecured credit line to every applicant. In fact, some creditors prefer to support the financial needs of local borrowers only. On the other hand, certain lenders will offer money to borrowers from anywhere but require information that other lenders didn’t need. Since the application process is often difficult and time-consuming and because every application creates a potentially damaging inquiry on your credit report, it’s best to apply with a variety of lenders within a short period of time to take advantage of a loophole called “rate shopping.”
· SUGGESTION: Use a reputable financial services company that can get your application in front of as many lenders as possible with only one application.
7 Reasons Why an Unsecured Credit Line Is Useful
Unsecured financing comes in handy in several ways, including but not limited to the following:
· It helps to keep your valuable assets protected from seizure.
· It gets reported regularly to the three main credit bureaus (Experian, Equifax, and TransUnion).
· It can drastically improve your credit score if used responsibly.
· The money is made available quickly.
· A revolving unsecured credit line means you have access to cash at all times as long as the spending limit is available.
· It is typically targeted towards borrowers who need fast and/or short-term financial assistance.
· It allows you to borrow a significant amount of money without submitting mounds of supporting documentation.
This article was written for Grand Teton Professionals for Fast Unsecured. For Credit Repair Solutions and Support, please contact us at 203-518-4923 or email us at Support@FastUnsecured.com. For Media Relations, please contact Misty.Burrell@GrandTetonProfessionals.com