How to Increase Your Chance of Getting a Personal Loan
Many people borrow money for a variety of reasons. However, some will find it much easier to borrow than others. There are a number of different reasons for this. There are some things though, that you will be able to improve that will give you a better chance of being approved for a loan.
You will need to show that you are capable of making the repayments on the loan. Therefore have a think about how much you think you can afford to repay and see what the repayments are going to be on the amount that you want to borrow. If you think that you will be able to easily afford them, then you will probably have a better chance of getting the loan. This is because your income is taken into consideration as well as any other loans that you have. If you are earning enough and not spending too much, so that you can afford the repayments, this implies that those checking your credit report would also be able to see this.
It is good if you can show that you are reliable with regards to making payments. This means that you pay your rent or mortgage, bills and loan repayments on time. A lender wants to be assured that you can show the ability to budget well and therefore can be trusted to make the repayments. If you always pay everything on time, then this will be great, but if not, then it could be wise to start doing so. If you have not already, set up direct debits so that bill payments come out automatically, this will make it easier to remember to pay them. It may help if you change the payment dates to just after your pay day. Make sure that you can balance the books each month by making sure that these bills are paid and that you have bought all of the essentials that you need before you start buying luxuries. This means pay your rent or mortgage, utilities and loan repayments first and then make sure there is enough to cover food and transport before you start buying treats such as alcohol, night out, clothing and things like that.
It is wise to check your credit report to make sure that all of the details on it are correct. You can do this for free and it will have no influence on your credit rating. It is worth doing so and making sure that you have nothing there which is incorrect. For example it may say that you owe money which you have paid off and so you will want to make sure that is corrected. Make sure that everything is up to date and you will have better chance of getting the loan approved. You can also see whether there are any areas flagged up which may make it harder to get a loan. This could perhaps be that you do not earn enough, have too many outstanding debts or something like that. Once you know if there is anything like this and what it is, you will be able to try to improve it.
It could be better to apply to a lender that you have used before. Whether you have used them for borrowing or some other financial need, it will mean that they know you. They will have some customer records of you and they will know what you were like as a customer. Assuming that you were a good customer, this could very much be in your favour. If you currently have financial products with them, this could be even more of an advantage. You may know staff there, if you bank in a branch and maybe able to discuss the loan with them which could increase your chances of getting it approved.
Before you apply for a specific loan, see whether there are any criteria as to what they are looking for in a borrower. Consider how much the repayments will be and whether you feel that you would fit their criteria and be able to manage the repayments. It is worth noting that if you apply for a loan, you may get offered a higher interest rate if the lender thinks that you are more of a risk. Therefore make sure that you check this and if you are not offered the best rate, ask why. This could help you to know whether you should be considering making some changes and what they should be.
Another way to be more likely to be approved for a loan is not to have much debt. So if you are thinking of applying and you already owe money then there is a lower chance that you will be lent some. If you want to borrow, it is unlikely that you have the resources available to pay off the debt you have, but it is worth thinking about whether you really need to borrow more or if you can do without and work on paying off the debt that you have first.