Home Finance Applying For A Personal Loan? Improve Your Chances of Getting Approved
Do you need to borrow money and are worried that your application will be denied? What you do with your finances before you apply can make all the difference in your chances of getting approved for a personal loan.
Follow the tips listed below to significantly improve your odds for success:
1. Check Your Credit Report And Score
Any errors on your credit report can drastically affect your credit score, so make sure to carefully check for any inaccuracies. If you do notice one, immediately contact the creditor that reported it and dispute it with the credit bureau online. Apart from that, make sure your credit score is in the 700s or 800s In order to meet a lender’s minimum requirements.
2. Decrease Your Debt
Debt can make it more difficult to get approved for a loan, so before you apply, pay down your debt as much as possible, starting with your credit card bills. This lowers your credit utilization and debt-to-income ratio, increasing your chances for approval.
3. Steer Clear Of Hard Credit Inquiries
A hard inquiry on your credit report generally happens when you apply for a new line of credit, but is sometimes also conducted when you apply to rent an apartment or open a new cell phone plan.
They should be avoided as much as possible because besides reducing your credit score, too many recent hard inquiries also indicate a higher-risk applicant. This is likely to make a lender more cautious about approving your application.
Attempt to go without any hard credit inquiries for at least three to six months before you apply for a loan.
4. Choose The Right Lender
It’s important to find the best lender for your financial situation so that you don’t waste your time or money. If you apply for a loan with a lender whose credit score or income requirements you don’t meet, your application is likely to be denied and you’ll have an unnecessary hard inquiry on your credit file.
If you have good credit but apply with a lender that is geared towards bad-credit borrowers, chances are you’ll get approved with a higher APR than you could have gotten elsewhere.
5. Find A Cosigner
When someone cosigns a loan with you, they essentially take responsibility to pay off your debt if you cannot. So if you’re someone who doesn’t have excellent credit, the best way to improve your chances of getting approved is to look for a cosigner who does.
With a little bit of planning and strategy, you should be able to make yourself a more approval-worthy applicant.