We can’t really say there is a formula that is used worldwide in order to boost one’s chances of getting approved for a personal loan because there are a lot of factors that comes into place. The requirements for getting approved vary from one lender to another and some online lenders even consider some educational level before they can approve a loan. The only thing that all the online lenders have I common is that they all want their money back and they want it back in time. In order to improve the chances of getting their money back on time, they only approve borrowers who meet certain requirements. If you want to be among those who get approved, use the following loan tips which will boost your chances of getting approved for a personal loan.
Getting Approved for a Personal Loan
1. Clean up your credit
It is without a doubt that your credit score plays a very significant role in your chances of getting approved for a personal loan. If you have a bad credit score the chances of getting approved for a loan are very minimal and if you have a good credit score, your chances of getting approved for a personal loan are very high. Check if your credit report has any errors because some errors might end up hurting you.
Your credit report might be having errors like closed accounts that reports open, wrong accounts, and even credit limits that are incorrect. Make sure to check your credit reports each and every year and correct any errors which might come back and hurt you.
Checking your credit report is free. Provide evidence about the errors on your credit reports via phone. Writing or online and your errors will be fixed as soon as possible. Be sure to be making the monthly payments towards any debt that you might be having and if possible be paying more than the minimum amounts required. By doing so, you will be making your payment history a big favor as well as your credit utilization ratio.
Your payment history and credit utilization ratio contribute greatly to your FICO score. As a part of cleaning up your credit card, contact the customer service of your credit card from the number on the back of your credit card. Ask for an increase in the limit of your credit card. You will have a better chance of getting approved for a personal loan if your payment history is good and your income has improved since acquiring the credit card.
2. Rebalance your income and debts
When you are applying for a personal loan, you will most definitely be asked to show your annual income. There is no problem if you include the income that you earn from your part-time work. In order to improve the chances of getting approved for a personal loan, you can consider working on weekends and starting a side hustle which you can be earning some extra dollars. If you can’t, then you try working hard to ensure that you have a pay rise on your job. Do everything possible in order to pay down your debt.
By boosting your income and lowering your debt you will be improving your debt to income ratio. Which is something that is really considered by the loaning companies before approving a loan. Sell your liquid assets like your stocks that are held on your taxable accounts. As a result, aiming for a higher rate of return. This strategy might not work for all institutions but most believe that if you can manage your current debt. Then you can also be able to take more and be able to manage too.
3. Don’t ask for too much money
You should definitely not ask for more money than you actually need to achieve your financial objectives. This will be raising a red flag to the lenders and they might consider it risky approving your loan. Find the right reason why you are asking for a certain amount from a loaning company. Explain how you need that specific money to cater to a particular need. In addition, ask exactly for that amount and nothing more. Asking for more than you need also makes your budget even tighter. So you will be paying larger amounts monthly and you will still be catering for your other financial obligations. Like paying your mortgage payments and student loan.
4. Use a cosigner to get a personal loan
If your credit score is not that good, adding a cosigner who has a better credit score (good credit score) and who has good income will improve the chances of getting your personal loan approved. The cosigner is usually equally responsible for repaying the loan you will take. If you find a person who will agree to it then you are in luck. You might be having every motivation and intentions to repay the loan you will be taking. However, with this life, you can never be so sure about everything because who knows. You might lose your job, get disabled or anything that might make you unable to pay the loan. It is because of that it is very important to have a very honest conversation with your cosigner. In addition, make sure he or she fully understand everything.
5. Find the right lender
Doing some research about the best loaning companies will not cost you a thing. Most of the online lenders actually disclose all the requirements and the credit scores as well as income that one should before he or she gets his/ her loan approved. You may compare different money lenders here Loan Advisor. Carefully examine one by one and see which you meet the minimum qualifications. With most of the lenders, when you prequalify for a loan. It triggers a credit pull which actually doesn’t have any impact on the credit score. Check several lenders and compare their terms. Finally, choose a loan option that has payments and costs that fits your budget.