How To Apply For A Credit Line With Bad Credit

By: Angie Marcum

Break Studios Contributing Writer

Knowing how to apply for a credit line with bad credit can significantly increase the odds you will be approved. Contrary to popular belief, those with damaged credit are often eligible for various types of credit with reputable lenders. However, there are a few simple steps that should be followed before applying for a credit line with bad credit.

REVIEW Viewing credit reports from the major credit bureau agencies should always be the first step before applying for any type of loan and/or credit card, regardless of credit history. The consumer should check for error and ensure that all information is correct and up to date. In the event that it is not, the appropriate steps should be followed to make any necessary corrections.
IMPROVE Before applying for a credit line with bad credit, take steps to increase your FICO score. This includes bringing any past due accounts current, paying down balances and making timely payments. While these things may seem trivial, these small acts can increase credit worthiness in a short amount of time.
ASSESS When applying for a credit line with bad credit, the consumer should assess his debt to income ratio. Credit worthiness is not only based on whether or not the consumer has good credit, but whether or not he can afford to pay it back. Having sufficient income and being able to show proof of such income is often required.
COME CLEAN Being honest with the lender about potential credit problems before applying can be beneficial. Often times, the particular banking institution may have programs in place especially for those with less than perfect credit.
COLLATERAL Just in case, it is always a good idea to have a cosigner, co-applicant and/or some type of collateral. This reduces the potential risk for the lender and can help the individual with bad credit obtain more reasonable interest rates.
ALTERNATIVES Depending on the severity of the credit, the consumer may want to consider a "secure" line of credit. This method is similar to providing collateral, typically meaning the consumer must initially prepay or make a deposit. Sometimes, it may be in the best interest of the consumer to pursue this option first. Not only can this assist in receiving funds, but can help improve his credit.