Getting approval for a personal loan is not always an easy task, especially when you do not have high credit. Besides the credit score, there are various things you must consider before approaching your lender. Even though there are no universal laws when it comes to personal loan application, there is one thing typical among all lenders. They all want timely payments and only approve loans for clients who respect this, among other requirements.
Keep reading to find out how you can increase your chances of getting a personal loan.
Find the best lender.
Choosing the right lender can increase your chances of getting the loan despite your poor credit score. These financial institutions include local credit unions and community banks. These lenders should come on top of your list of potential lenders if you’re struggling with a poor credit score. These financial institutions have favorable conditions of personal loans and are willing to offer loans to people with credit scores of less than 700.
Apart from the community banks and local credit unions, you can also try online lending networks.
Increase Your Credit Score
Whether or not you are applying for a personal loan, you should always take the necessary steps to improve your credit score. Credit scores do not always stay the same. A fair enough credit score is more than 640, a credit score higher than 700 is good, while a credit score of more than 760 is excellent. The following are ways in which you can improve your credit score.
Pay bills promptly
Get credit when you pay cell phone and other utility bills on time
Clear debts and strive to maintain low balances on revolving credit
Don’t close credit cards that you no longer use
Get a co-signer
Despite your good intention of paying the loan on time, you cannot prevent unfortunate circumstances such as job loss, or any adverse event that impairs your ability to repay the loan on time. Hence, it is always advisable you get a capable co-signer. When you are unable to repay the loan, the responsibility to pay the loan falls on your co-signer.
Look for a financially stable co-signer who is ready to take the risk of being your co-signer. However, make sure your co-signer understands the risks involved before they agree to co-sign.
Getting approval for your loan is not rocket science; just be sure to do thorough research on your potential lender. Also, take steps to increase your credit score and be careful when choosing your co-signer.