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This Is What Bad Credit Lenders Want to See to Approve You



When you have less than perfect credit and need a car loan, you’re going to find that bad credit lenders, or subprime lenders, have additional requirements you need to meet. There are rules about your income, vehicle, and loan that must be met. To learn more about these requirements, keep reading.

5 Things You Need to Qualify for a Bad Credit Auto Loan

To qualify for a bad credit auto loan, it’s important that you know the rules of subprime lenders, and what documents you can use for proof. The specifics vary, but you can expect bad credit lenders to want to see these five things to approve you:

  1. This Is What Bad Credit Lenders Want to See to Approve YouEnough income – Subprime lenders want to ensure that you make enough income to support a car payment. Generally, they ask for a minimum pre-tax monthly income of $1,500 to $2,000 from one job. You should bring in a recent computer-generated pay stub showing year-to-date earnings to serve as proof of income.
  2. You to be at least 18 years old – You can’t legally apply for a loan in the U.S. unless you’re at least 18 years old. Bring in your driver’s license or valid state I.D. to prove your identity.
  3. A stable residence – Bad credit lenders want to make sure that you have a stable residence where the vehicle is going to be kept. Bring in a recent utility bill in your name that lists the address on the application.
  4. A down payment – You typically have to make a down payment in order to get approved. Most subprime lenders require a minimum of $1,000 or 10% of the car’s selling price, whichever is less.
  5. A working phone – Lenders want to make sure you can be contacted. Bring in a recent phone bill in your name showing the address on the application to serve as proof of phone. It can be a landline or contract cell phone.

In addition, although not required for approval, subprime lenders need you to provide a list of five to eight personal references. These can be anyone you know, as long as they don’t live at your address. Make sure you include full names, email addresses, work and home phone numbers, and home addresses.

What About Vehicle and Loan Requirements?

Not only do you need to qualify for the loan, the car needs to as well. Bad credit lenders aren’t going to finance just any model since it must fall within their vehicle guidelines. The general rule of thumb is that they don’t finance cars that are over 10 years old and/or have over 100,000 miles.

When it comes to your bad credit auto loan, there are three things that must be met:

  1. The amount financed must be at least $5,000. This doesn’t mean your vehicle has to sell for at least this much, it means that the overall cost of the loan must be greater than or equal to $5,000.
  2. You also have term limitations you must follow. Generally, your loan must be at least 36 months, and no more than 84 months.
  3. Finally, your loan to value (LTV) ratio must follow the lender’s guidelines. An LTV ratio is the amount financed relative to the value of the car. Typically, the maximum LTV ratio ranges from 120% to 150% of the vehicle’s retail value.

Find a Dealership Near You

Now that you know what bad credit lenders require to approve you for an auto loan, are you ready to find a local dealership to work with? If so, you’ve come to the right place.

Here at Auto Credit Express, we’ve been helping customers get the financing they need for over 20 years by connecting them to local special finance dealers that have the proper lending resources available.

Let us help you get that car loan you’ve been looking for. All you need to do is fill out our easy, free, and no-obligation auto loan request form, and we’ll get right to work for you!

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Bad Credit

4 reasons why your mortgage application could be rejected



Check yourself if you want to ensure your loan application is approved. (iStock)

When the Federal Reserve lowered interest rates to near 0% last year, mortgage rates followed suit. The average 30-year fixed-rate mortgage hit 2.65% at its lowest, and the average 15-year fixed-rate mortgage bottomed out at 2.16%. At publication, the 30-year FRM sat at 2.96%, and 15-year FRMs averaged 2.30%.

Despite economic uncertainty brought on by the pandemic, these low-interest rates increased enthusiasm in the housing market for potential home buyers. As more people flock to apply for mortgage loans, lenders are tightening their restrictions.


Unfortunately, many potential borrowers have been or will be denied a mortgage loan. Lenders consider several factors when deciding whether to loan money to a borrower. Not only do mortgage lenders consider income, but they also look at debt, credit score, and lifestyle factors. Within such a competitive market, you’ll want to make sure everything lines up if you’re going to get approval. (If you want to get a sense of what preapproved rates you’d get in today’s mortgage rates market, you can check out Credible’s lender marketplace).

There are a few primary reasons your mortgage loan application could be turned down in 2021:

1. Poor credit

One key factor that lenders consider when approving or denying a home loan is credit history. Your credit score is a quick way for lenders to decide whether you represent a trustworthy buyer. The minimum credit score required to purchase a home depends on the type of loan you want. You may qualify for an FHA loan with a score as low as 500 with a 10% down payment. If you want a conventional loan, you’ll need a score of between 620 and 660, and a jumbo loan requires a minimum score of 700. 

As lenders tighten their restrictions, borrowers who may have qualified in the past may find themselves shut out of a mortgage loan. 

In addition to your credit score, a lender looks at your credit report. You may not qualify for a loan if you have a history of missed or late payments, recent bankruptcy or foreclosure, or wage garnishments. In order to qualify, you’ll need to work on improving your credit score.


If you’re worried that your credit score is too low, you can potentially improve that bad credit by using Credible’s marketing partner Experian to boost your credit. You can add bills like rent and your cellphone payment to your credit score.

2. New or unsteady job

Lenders want to give money to people who have the income to make their monthly payments. They look for employment history and annual or monthly income history to determine if you can afford a mortgage. Ideally, you’ll have employment dating back at least two years. Lenders will want to see pay stubs and tax statements. 

However, if you’ve changed jobs recently or your work is more fluid (like freelancing), you may have to provide additional documentation to show that you can afford to make the mortgage payments. Alternatively, you could offer a larger down payment rather than a low down payment. 

Common ways to show income include:

  • Tax returns
  • Pay stubs
  • 1099 forms
  • Statements from investment income
  • Alimony or child support statements

When you’re looking for a loan, make sure to take advantage of an online mortgage calculator to help determine potential monthly payments. The loan payoff calculator can help narrow down your budget, so you choose a loan you can afford.


3. Large, unknown deposit

While having a sizable down payment can make getting a loan easier, having a history of large deposits into your account without records does not. It is perfectly acceptable for someone to gift you money, but you’ll need to provide documentation. If you have a family member or friend who contributes a large sum of money to your purchase, you’ll need to have them complete a gift letter stating the details of the transaction. 

When you’re ready, you can explore your mortgage options in minutes by visiting Credible to compare rates and lenders. Check out Credible and get prequalified today. 

4. Last-minute spending on a credit card or change to credit report

One of the most common reasons lenders deny a mortgage loan is a change in the credit report. Your lender can deny your loan up until you sign the final paperwork. If you’re approved for a mortgage loan and then use your credit card to purchase furniture for your home, the lender could deny your loan application.   

You can prevent having your loan rejected this way by planning. Avoid taking out any loans – like personal loans, auto loans or student loans – or spending too much on your credit card a few weeks before you apply for a mortgage loan. Additionally, don’t make any major purchases until after you sign your final loan documents and the key to your new home is in your hand. 


Are you ready to see if you qualify for a mortgage loan? Explore your mortgage options by visiting Credible to compare rates and lenders. 

Obtaining a home mortgage loan this year could be challenging. But, if you manage your spending, work on your credit score, and keep good financial records, you can substantially improve your chances of approval. 

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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Can You Get A Student Loan With Bad Credit?



Borrowing a student loan with bad credit can often be a challenge, but it is possible. If you have bad credit, federal student loans are a great place to start, but you can also look into getting a co-signer or finding a lender that uses other factors to determine your eligibility. Here’s how to start.

Options for student loans with bad credit

When you’re shopping for educational loans, any options you review will fit into one of two categories: federal student loans or private student loans. As a borrower with bad credit, you’ll encounter different benefits and drawbacks with each loan type.

Federal student loans

Federal student loans are a form of education financing that’s funded through the U.S. Department of Education. You can use the proceeds from federal student loans to help cover expenses such as:

  • Tuition.
  • Fees.
  • Books.
  • Room and board.

If you have credit problems, federal student loans are typically the best place to start. Most federal student loans do not require a credit check to qualify for financing, so bad credit won’t be an obstacle in most cases. PLUS loans are the one exception; these loans will check your credit, although they’re only looking for an adverse credit history and don’t have minimum credit score requirements.

Federal student loans do feature borrowing caps. As a result, these loans might not be sufficient to cover all of your educational costs.

Private student loans

Private student loans are a type of education financing that’s available through private lenders. Online lenders, banks, credit unions and even colleges and universities themselves may offer private student loans.

With a private student loan, the lender will almost always check your credit as part of the application review process. When you have bad credit, securing a private student loan may be a challenge. Bad credit can also impact the interest rate and loan terms a lender offers you — potentially making it more expensive to borrow money if you qualify for financing.

Many private student loan lenders will require you to have a minimum score in the mid- to high 600s to qualify for financing. However, the lender may allow you to apply for a private student loan with a co-signer if you are worried that you won’t be eligible on your own. Just keep in mind that co-signing for student loans comes with its own drawbacks, such as the risk of credit score damage for your loved one.

Most of all, it’s important to conduct your own research if you’re considering a private student loan for bad credit. Comparing offers from multiple lenders has the potential to save you money on interest rates, especially with bad-credit student loans. Over time, those savings could add up to a significant amount of cash.

How to improve your credit score before applying for a private student loan

Because your credit plays a key role in the approval process, it’s wise to make sure that your credit score is in the best shape possible before applying for a new private student loan. Better credit may improve your approval odds and could help you secure better rates and terms when you borrow money.

Here are four steps you can take if you want to improve your credit.

  1. Check your three credit reports. As you review your credit reports, make a list of any information that seems inaccurate and any negative items you need to address. You can claim a free copy of each of your three credit reports weekly at
  2. Dispute credit errors. Millions of Americans have errors on their credit reports. Some credit reporting mistakes have the potential to damage your credit score. If you discover errors on your credit report, it’s wise to dispute them right away.
  3. Lower your credit card utilization. A high balance-to-limit ratio on your credit cards can be bad for your credit score, even if you make your payments on time. You can lower your credit utilization rate (and likely save money in interest) by paying down your credit card balances. A credit limit increase is another out-of-the-box way that could help you to lower your credit utilization if you can’t afford to pay off all of your balances at once.
  4. Establish positive credit. If your credit report is thin, adding some new positive accounts to it might benefit you over time. Keep in mind that you may want to start with accounts you’re likely to qualify for despite having bad credit or no credit. Secured credit cards or credit builder loans may be worth considering here.

The bottom line

Can you get a student loan with bad credit? There’s a good possibility that you can, and your best bet is starting with federal student loans. But if you need private student loans to help finance your education, bad credit could make borrowing money more difficult and more costly.

Focus on improving your credit as much as possible before you apply for financing. And remember, if you decide to accept an interest rate that you’re not thrilled about now, you can always refinance your student loans in the future.

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Bad Credit

Best FHA Lenders of 2021



Final Verdict

The best FHA lenders offer a combination of excellent service, low rates, and flexible terms. Guaranteed Rate does just that. Their completely online application process and streamlined document transfer and closing technology make the mortgage process a breeze.

While this company is known for making the mortgage process completely digital, they also have hundreds of branch locations around the country for homebuyers who prefer that in-person touch. When it comes to getting the best deal, Guaranteed Rate offers competitive rates and low lender fees. You also have a variety of term and down payment options to choose from with their FHA loans.

Compare the Best FHA Lenders

Company Minimum Credit ScoreStarting Interest RateTermsMinimum DownpaymentOnline Application
Guaranteed Rate
Best Overall
6202.625%15 or 30 years3.5%Yes
Carrington Mortgage
Best for Bad Credit 
500 Not specified 15 or 30 years 3.5% No
Rocket Mortgage by Quicken Loans
Best for Real Estate Investors 
580 2.25% Not specified 3.5% Yes 
Caliber Home Loans
Best for New Home-Buyers 
620 Not Specified Not specified 3.5% Yes 
Chase Bank
Best for Customer Service 
Not specified 2.50% 30 years 3.5% No 

How to Choose the Best FHA Lender

Choosing the best FHA lenders is a personal process, and there are a number of factors that should be considered before you decide on where to get your FHA loan. Here’s what to look for:

  • Qualification requirements: The first step in narrowing down the best FHA lenders is to make sure you meet their credit and income requirements. Although they might not publish it, all lenders will have a minimum credit score requirement and debt-to-income ratio requirements.
  • Rates and fees: Shopping around for the best rates and lowest fees is how you save money on FHA loans. In addition to looking at interest rates, pay attention to lender fees like application fees, closing fees, origination fees, underwriting fees, and appraisal fees.
  • Application process: Do you want to do everything online without having to speak to someone, or do you prefer working with a representative in person? Your answer will guide who you end up choosing for your FHA loan.
  • Loan terms and amounts: You should know whether you want a 15-Year or 30-Year mortgage and roughly how big of a loan you need. That way, you can rule out any FHA lenders that don’t offer what you’re seeking. 

FHA Loans vs. USDA Loans

Both FHA loans and USDA loans are backed by government agencies and allow borrowers, including those with lower credit scores than lenders typically require, to buy a home with a lower down payment and interest rate than they might normally qualify for. However, they’re not the same—namely, USDA loans were created to stimulate housing markets in rural areas, so you can only use them to buy a home in qualified zones. The table below illustrates some key differences.

Loan TypeFHA LoanUSDA Loan
Minimum Credit Score580 (500 if making a 10% down payment)640 in most cases
Debt-to-Income Ratio Less than 43% (50% if you have good credit) 41% in most cases
Income Requirements None Cannot exceed 115% median income for your area
Minimum Down Payment 3.5% 0%
Loan Limits $356,362 minimum, $822,375 maximum, varies by region None
Mortgage Insurance Required Required
Other Requirements Home must be primary residence for at least one year Must buy in a qualified rural area

Frequently Asked Questions

Are FHA Loans Hard to Get? 

FHA loans are easier to get than conventional loans. They have lower credit score requirements and more flexible income requirements.

What Qualifications Do FHA Lenders Generally Require? 

Most FHA lenders require you to have a credit score of at least 580 for a loan with a 3.5% down payment or 500 with a 10% down payment, although some lenders will require a score of 600 or 620. FHA lenders also look at your debt-to-income ratio or the portion of your gross income that goes toward your debt each month, and that should generally stay below 43%. You can sometimes qualify with a DTI of up to 50% if you have good credit.

What Is the Downside of Borrowing from an FHA Lender?

The main downside of FHA loans is that they require mortgage insurance. Even if you go with the best FHA lenders, this can mean a few extra thousand in closing costs and higher monthly payments. Also, you can only get FHA loans for a primary residence, so using them to purchase an investment property is tricky. You must live in the property for at least the first 12 months.


We considered over a dozen different mortgage lenders offering FHA loans before narrowing down this list to the best FHA lenders. In doing so, we reviewed customer service, rates and fees, the application process, credit requirements, and variety of loan types offered.

Once we nailed down our picks for the best FHA lenders, we honed in on their terms, requirements, and mortgage process to find lenders that specialize in everything from first-time homebuyers to investors to borrowers with bad credit. Transparency was also important, so lenders that published clear rates and terms were preferenced.

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