No matter what their requirements are, one thing is certain – each one wants the loan repaid. How can you ensure a personal loan lender approves your application?
Look Over Your Credit Report
Lenders weigh their decision heavily on your credit score. The higher a score, the better your chances of an approved application. This is why you need to review your report for mistakes since mistakes can damage your score. Such issues include closed accounts noted as open, wrong accounts, inaccurate credit limits, etc.
Attain copies of your credit report from AnnualCreditReport.com. If you find errors, dispute them via online, by phone or in writing, submitting evidence to your claim. Make more than your minimum monthly payments to pay down your debt.
Ask for a credit limit increase, especially if you’ve had a rise in your income and haven’t missed payments. Keep in mind that asking for a credit limit increase could hinder your score initially if they company does a hard pull on your report.
Balance Out Your Debt and Income
Personal loan applications ask for yearly income, so be sure to include all money you get such as part-time jobs. Do what you can to pay your debt down or sell liquid assets like stocks to pay them. The idea is to lower the debt-to-income ratio. While not all lenders have stringent DTI requirements, the lower the ratio, the better control over your debt you have.
Request Only What You Need
Lenders view it risky to lend out a lot of money, even if you’re asking for it. Consider the reason for the loan and equate a dollar amount to that need. Remember, the more your loan is, the higher your payments are going to be. This could make it harder to meet financial obligations you already have such as mortgage, auto, student loans, etc.
Have A Co-Signer
If your credit score is less than stellar, consider asking someone to co-sign on your loan. This will strengthen the application and boost the chance for an approval.
The downside is that a co-signer will be responsible on the loan, which is something for them to consider if they can afford to take on the financial obligation if you fail to repay the loan. While you may be adamant to repay the loan, life does happen, and you don’t know when your income will be negatively affected.