Applicants For Military Loans With Bad Credit: What Options Are There?
Even for those of us with excellent job security, a bad credit history is something that many lenders want to know about. Military members have arguably the best job security of all, since they are employed by the US government, but they can suffer poor credit ratings if they live outside their means. The result? They must apply for military loans with bad credit.
The good news for them is that job security alone makes the chances of getting fast loan approval extremely likely. However, the terms will be affected, with higher interest rates charged and probably a lower loan limit applied, which in turn can reduce the effectiveness of getting the loan in terms of its purpose.
Still, getting approval for military loans is a lot easier than civilian loans, especially if the compromises that are expected to be made are actually accepted. But what are the terms and conditions that apply to these loans, and who can benefit from them?
The Options Available
As would be expected, there are several types of loan available to military members, but just two of them are tailored for those applying for military loans with bad credit. They are designed for the two different types of bad credit borrowers that typically apply – namely those with a poor credit history, and those who have no credit history at all.
The latter group comprises those who have joined the military straight for high school, without ever having had a reason to seek a credit card or loan before. Because of this, lenders have no reference point with which to assess the loan risk. And since they are cautious creatures, lenders always start a borrower on the bottom rung. The chances of securing fast loan approval remain quite high, provided the basic criteria is met.
However, the second group comprises those who have a proven poor record. They have earned their low scores due to missed repayments and defaults, so the lender is more certain of a high risk when granting a military loan to them.
Qualifying for the Loan
The basic qualification requirements are pretty straightforward, and do not differ from the criteria that civilian applicants must satisfy. The difference, of course, is that those seeking military loans with bad credit must be in the military – but this automatically means they are over 18, are US citizens and have full-time employment.
The only real issue for applicants is their financial situation. While the credit score is noted, it is not the sole reason why a loan application might be rejected. The debt-to-income ratio is much more important, with the applicant proving the repayments on the loan are affordable. Only then can fast loan approval be expected.
The ratio stipulates that no more than 40% of available income be committed to repaying the new military loan, which limits the size of the loan available. For example, if $1,000 excess income exists, the maximum permitted repayment is $400.
Where To Get These Loans
Traditional banks do provide special loan terms to members of the military, but these are not typically the best terms available. A better source when seeking a military loan with bad credit is online, where many of the best deals are found anyway. However, a third worthwhile source is the private lending firms that have been designated as recognized military lenders.
Getting fast loan approval is something all applicants want, and online lenders can provide a decision with a few minutes of submitting an application. However, when borrowing online, it is essential that the reputation of the lenders be checked out on the Better Business Bureau website before agreeing to any military loan deal.