Perhaps you’re experiencing financial difficulty, or find yourself in a less-than-desirable situation. Whatever the circumstance is, a personal loan might be just what you’re looking for. Of course, a personal loan allows you access to a certain amount of money that you pay back in monthly installments.
Personal loans are quite similar to home loans; however, the amount is much lower. That being said, they are still an excellent way to pay for more expensive items, so you don’t have to spend time saving or dip into your emergency fund. They can be used for things such as cars, home renovations, medical expenses, and so much more.
However, when it comes to getting that personal loan, it isn’t as easy as one-two-three. You still have to be approve — and depending on your financial history and other things, that can prove difficult at times. With that in mind, here are three ways to improve your chances of approval:
Get your credit score into shape
The scary words everyone fears: credit scores! However, sometimes we have to push past the fear and get on with life so that we can be approved for things such as a personal loan. But to be able to have the best chance of getting a personal loan, you first need to make sure that your credit score is in good shape.
Your credit score helps prove to your lender that you are able to commit to paying back the installments. So it’s crucial that your credit score is good if you want to have a decent chance at getting approved for your personal loan.
Get rid of your debt
Debt is not a great word in the world of personal loans — and having a plethora of it will definitely bring hard times for those who are trying to get approved for a personal loan. The way to ensure your lender that you will pay it back is to show them that you are financially stable. Unfortunately, excessive debt doesn’t exactly entail that, which is why it’s best to reduce your outstanding debt as much as possible — even if it means saying goodbye to your credit card. Doing so will make your lender more comfortable in approving your personal loan application.
Keep career changes to a minimum
This may come as a shock to some people, but realistically, career changes can influence your personal loan drastically. This means that if you will be applying for a personal loan now or in the future, staying exactly where you are is advised. It looks bad when a lender checks your career history and sees you jumping from job to job.
Before you apply for a personal loan, get your life sorted and make sure that the job you are in is stable and that you like your job. The stronger your foundations are, the stronger your application will look, in turn, that means a higher approval rate. Keep in mind that when you apply for a personal loan, you will be asked to provide between three and six months of pay checks.
So there you have it. By following a few key steps outline here, your odds of getting the loan will be greatly improved.
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The Millennial Money Woman says
Thanks for sharing these points! I think you make a great point when you say to keep career switches to a minimum, since many lenders prefer to see stability first to ensure you won’t be losing your income source.
james gunn says
Thank you for sharing your experience and useful information. It’s hard for someone without a college degree in economics to make sense of it. Handling finance can be tricky. In my opinion, this is a very important topic now.