Whether you need money due to unexpected expenses or you want to pay down higher-interest loans, the next question is how to avoid being rejected when you apply for the loan. Whether you have good or bad credit, there may be issues in your credit report, credit history or application that could cause your request to be declined. Here’s how to increase your chances of getting approved for a loan.
Monitor Your Credit Report
Lenders check your credit report so you should, too. You can pull your credit report online or via a phone call. The first thing to do is review it for errors. If there are duplicate accounts listed, incorrect credit limits or someone else’s debt listed as yours, all of this hurts your credit score until the information is corrected.
The good news is that you can file an appeal to remove the mistakes. You should also look for unpaid debts you may have missed. For example, an old store credit card you have forgotten about that shows a modest sum that’s never been paid may be pulling down your credit score. You may be able to boost your credit score by paying it off and closing the account.
Know Your Income
This should be a no-brainer, but many don’t consider their income in detail. Know how much you earn annually because many lenders have a minimum income requirement for borrowers. If you don’t know your income and put down in incorrect number, they could reject your application as potentially fraudulent. Save yourself the hassle and do the calculations now, and gather up the proof that you earn that much. Also, keep in mind that the income you used to earn doesn’t count in your favor anymore if you’re unemployed.
Know Why You’re Applying for a Loan
Lenders often want to know why you’re asking for a loan. Ensure you are able to state how much you need and why you need that much. Know that you’re making a mistake when you ask for more than you need for the project, as this is seen as risky by lenders. One solution is to approach lenders that do not require a copy of your business plan or budget for your home renovation project.
If you need the loan for immediate needs, alternative lenders are often better because they won’t make you wait for approval as long as you meet their income and documentation requirements. They’re even flexible on the length of the loan and willing to lend to those with poor credit. This is why you should consider alternatives; if you want to know more about these types of loans and how they work, visit https://bingoloans.co.uk for more information.
Pay Down Your Debts
Another way to improve your credit score is to pay down your debts. When you lower your overall debt load, creditors are comfortable lending you money as you are reliable.
One thing you could do is tackle the loan with the highest interest rate. Paying the minimums allows the debt to grow while paying more every month will have the greatest impact on your monthly payments. It is these monthly repayments you must make every month relative to your income that creditors use to determine your creditworthiness. If you’re mortgaged to the hilt, they won’t want to lend you more.
Regardless of why you are seeking a personal loan, there are steps you can take to improve the odds you’re approved. These tips will be valuable no matter your credit situation or income.