Many people have suffered financially during the pandemic, and sadly, people are still finding ways to have some sort of relief two years later. Apart from working several jobs, many of us depend on loans as an easy solution for our financial distress.
But despite being such a hard worker and coping with the complicated loan process, getting money is still pretty challenging at most times. As a result, borrowing from lending companies and banks has become extremely difficult, especially for people who have been declined too many times already.
However, you can’t just give up. This article will show you some valuable loan tips that can help you boost your chance of getting approved.
Increase your Credit Score
Your chance of getting approval will only get higher with good credit standing. In other terms, the higher the credit score, the higher the chance of getting approved. Examine the errors you commonly commit that make your credit score too low.
Things like closed bank accounts, incorrect credit limits, and wrong accounts are the common reasons people get low credit scores. You might think that these things are irrelevant, but companies use financial fraud detection software that can determine your capability to pay off a loan through your records.
Make sure to pay your bills on time. It would also help if you’d be attentive about paying your debts every month, and if possible, pay more than what the minimum requires. Doing so will boost your credit history, significantly increasing your credit score.
Additionally, ask to have an increase on your credit limit. Call your credit card providers and ask if you can have an increase as a reward for being a good payer. You’ll have a better chance of getting an increase if you earned extra income or your salary has risen.
Balance Your Income and Debts
Loan applications typically ask for the borrower’s annual income. Here, you can include money you earn from your side hustles, like a small business or part-time jobs. If your income is too low, you might get approved for a loan, so it’s better to start a side job that would increase your annual income.
If you have existing loans that you can’t pay off yet, consider selling some of your assets, such as stocks. Use the money you earn to pay off any existing debts you have so that you can apply for a new one with a higher amount.
In general, lowering your debts and boosting your income is the key to improving your chance of getting loan approvals.
Don’t Borrow A High Amount.
The rule of the thumb when it comes to borrowing money is that borrow what you only need. Asking for more cash than what you need can be risky and reduce your chance of getting approved.
Examine the reasons why you’re asking for a loan. Put a specific amount for your every need, and don’t go beyond the limit. In addition, a huge personal loan can hurt your monthly budget. Remember that loan payments occur monthly, so they can definitely impact your finances.
Get a Co-signer
If you can’t get approval for having a “fair” credit score, getting a co-signer with good credit standing can boost your chances of getting approved.
Co-signers are just as responsible as you in repaying the loan; it’s crucial to find someone who’s willing to take the risk. Because even though your intention to pay is sincere, there are things you can’t predict- losing a job, getting injured, disability, and many more. These things could impact your ability to work and repay your loans.
Sign with The Right Lender
Finding the right lending company is crucial. Many online lenders voluntarily disclose their annual income and credit scores loan requirements. Plus, they also let you know if they allow co-signers.
In most cases, you might meet the lender’s minimum requirements and get a pre-approval or loan. However, here’s the catch: being pre-approved has minimal impact on your credit score, or worse, no impact at all.
In addition, here are some tips you might find helpful:
- Set realistic numbers.
- Understand alltypes of loans.
- Compare loans from different lenders.
- Talk to lenders, ask questions if you have concerns.
- Prepare all required documents ahead of time, make sure to make a copy for all of them.
- Check your current liabilities and assets.
- Prepare your proof of income, including your income from part-time jobs and small businesses.
- Be responsible.
Note that getting approved for loans with good payment schemes and low interest is a huge privilege. But you need some time to boost your credit score and show that you’re a responsible borrower. Overall, it’s a process that would require you to be a disciplined individual.