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5 Ways You Can Improve Your Chances of Getting Your Loan Approved

Friday Jan 11, 2019
5 Ways You Can Improve Your Chances of Getting Your Loan Approved

For many people, including those with a solid financial stand, loans are inevitable. You'll at some point need to borrow money for one reason or the other, maybe to buy a car, buy a home, undertake a home improvement project, among other common loan purposes. However, it is not always certain that your loan application will get approved by the lender you approach and in good timing. To avoid this uncertainty, it requires some proper planning, research, and financial discipline.

Here are 5 ways you can improve your chances of getting your loan approved.


1. Keep Your Credit Score High

Your credit score, which is a measure of creditworthiness, is one of the things all lenders consider before approving your loan application. A high credit score will always give you higher chances of approvals. Additionally, the amount you qualify to borrow (credit limit) will highly be dependent on your credit score in most cases. In all states, adult Americans are entitled to at least one free annual credit report. Before you even consider borrowing, be sure to find ways to improve your credit score. Also, it's important to note that credit reports may sometimes contain errors such as wrong accounts, incorrect credit limits, and wrong CRB default reports, all of which could hurt your credit score. Be sure to identify such and follow up with the necessary institutions for correction.


2. Know The Amount to Borrow (Debt to Income Ratio)

Your loan application approval will also depend on the amount you're applying for, and whether or not your income is enough to service the loan and still meet your other financial obligations without too much strain. Before deciding on the amount to borrow, take the time to do the math. Consider lowering your debt while increasing your income (maybe getting a second job) to improve your chances of getting your loan approved.


3. Pay Down Existing Debt

Paying down your existing debt is inarguably the best way to increase your credit limit, boost your credit score and improve your future loan approvals. If you're struggling to clear off your debts on time, you can even, consider taking a evolve loans, debt consolidation loan, which buys all your debts, pays them off and compacts them into a single loan that you can easily service.


4. Approach The Right Lender

Different lenders have different eligibility criteria, loan rates, terms, and conditions. Some lenders are so strict when it comes to loan approvals, especially for borrowers whose credit has been on the rock. Some will ask for too much documentation, whereas others will offer too little for too much interest. Be sure to do your homework well and know what to look for in a good lender before approaching one.


5. Find a Cosigner or Collateral

Depending on the type of loan you're looking for, having collateral and introducing a cosigner can increase your chances of being approved. For most personal loans, collateral can be a car, a costly appliance or even a home in what is called the homeowner's line of credit (HELOC).

For both business entities and individuals, loans are a huge necessity. In summary, your credit history, your income, and your ability to pay are some of the most important factors that affect loan approval. With the above tips, however, you can easily raise your loan approval chances with little or no frustration.

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