For most personal loans, satisfying the basic eligibility criteria is enough to get your application approved. However, in many cases, banks and financial institutions often take a look at a lot of factors too, before granting approval. Therefore, focusing on these factors can help increase the chances of personal loan approval. And so, in this article, we’re going to be taking a look at the different ways in which you can ensure your personal loan approval. Let’s begin.
This is probably the most important factor that you would need to address in order to increase your chances of getting a personal loan approved. The first thing that lending institutions look at when scrutinizing loan applications is the applicant’s credit score.
A credit score of at least 700 or more is considered favourable and will surely boost your chances. If you find that your credit score is low, take immediate steps to rectify it and bring it back up before applying for a loan.
The next thing that lending institutions look at when verifying loan applications is your income. Applicants with a steady stream of income enjoy greater success when it comes to personal loan approvals. This is because a steady source of income increases the chances of you paying your loan obligations on time, which may not be the case in individuals with patchy and inconsistent incomes.
If you’ve already submitted a personal loan application with a lending institution, wait till you get a concrete reply before making your next move. Submitting multiple loan applications with different lenders in the hope of landing one can do more harm than good. Multiple loan applications from a single person basically indicates desperation, which is never a good sign. Also, your credit score tends to take a huge hit too.
Continuing on with the previous point, if you find your loan application being rejected, and if you really want to land one, make sure to apply again after a brief cool-off period. This way, you can prevent any hits to your credit score and in the meantime you can also work on your shortcomings as well.
By applying for a personal loan again after a period of at least 6 months, you’re basically demonstrating to lenders that your finances are in a good position for having sustained without a loan all this while.
If you find that your income is low or insufficient, or your credit score is not good enough, you can still increase your chances of getting a personal loan approval. How, you ask? By bringing in a co-applicant.
When you apply for a personal loan along with another individual with a good credit score and a strong income source as a co-applicant, lending institutions are more likely to view you favourably. Alternatively, if you don’t wish to bring in a co-applicant, you could also request another individual to become a guarantor or a surety for your personal loan application.
Your income, no matter how strong and consistent it may be, may still not be enough to get you a personal loan approval if your debt obligations are high. Therefore, if you find that your debt-to-income ratio is high, it is advisable to take immediate steps to bring it down before applying for a personal loan.
This way, you can increase your chances of getting it approved. One way to reduce your debt obligation would be to pre-close high interest loans and settle credit card outstandings. You could use windfall gains or bonuses, if any, to pre-close these loans, which will help minimize the impact on your savings.
Following these steps diligently is sure to increase your chances of getting your personal loan approved. So go on, try it out. And if you ever need any information on personal loans or any other kind of loan for that matter, visit Finserv MARKETS right away.