4 Ways To Improve Your Chances Of Getting A Personal Loan
Are you interested in applying for a personal loan? Do you have concerns about receiving an approval?
There are many benefits of a personal loan, ranging from the competitive interest rate to the fixed monthly payment.
While this may be just what you’re looking for, there is no guarantee of approval.
Upon reviewing your finances, you may come to find that you can improve your chances of getting a personal loan. Here are some steps you can take:
1. Review Your Credit Report
As you review your credit report, pay close attention to any red marks that may cause you trouble when applying for a personal loan.
In some cases, there’s nothing you can do. For example, if you have late payments on your credit report, you can’t do anything to remove them. The best step you can take at this point is avoiding more of the same in the future.
However, if you find an error on your credit report, you should contact the appropriate credit bureau to dispute it. Having an error removed can do wonders for your credit score.
2. Check Your Credit Score
A personal loan is unsecured, meaning you aren’t required to put up collateral to receive the funds.
While this is a benefit to the borrower, it means that the lender is taking on more risk. This is why personal loan lenders place so much emphasis on your credit score.
If you have a good (670 – 739), very good (740 – 799), or exceptional (800 – 850) credit score, you’re in better position to receive an approval.
However, if your credit score is fair (580 – 669) or poor (300 – 579), you won’t have nearly as much confidence when you apply.
If your credit score is below 670, you may want to take action to boost it before applying for a personal loan.
3. Reduce Your Debt-to-Income Ratio
Even if you have an exceptional credit score, it doesn’t guarantee your approval. For instance, if your debt-to-income ratio is high, the lender may have no choice but to turn you down. You must show that you have enough income to pay back a new loan.
Generally speaking, personal loan lenders don’t like to see a debt-to-income ratio higher than 45 percent. Of course, this depends largely on the loan amount, credit rating, and your income.
4. Compare Lenders
There are hundreds of personal loan lenders, all of which would be more than happy to answer your questions and review an application.
Get this: one lender may deny your request for a loan, while another approves you within 24 hours.
If your finances are in order, there’s a good chance that almost every lender will approve your application.
If your finances leave a bit to be desired, you may need to shop around and compare lenders to find the right one. In addition to reputation, focus on the terms and conditions of the loan.
By following these four steps, you’re improving your chances of getting a personal loan. Once you have your hands on the money, you can then use it as you best see fit.