Applying for a personal loan can be a frustrating process. Many factors go into determining eligibility, such as income, credit score, and employment history, and who knows how long it could take to find a lender who deems you eligible. While there isn’t a step-by-step guide on how to get automatically approved for an unsecured personal loan, there are some helpful tips you can use on your journey of loan acceptance. If you’re interested in a personal loan, keep reading to learn helpful information for applying for an unsecured loan.
1 Make Sure Your Credit Report Looks Impressive
One of the first things lenders look at when determining your eligibility is your credit report. They want to make sure you’re capable of paying back what you owe them, so before you apply for a personal loan, check out the following to make sure your credit report is up to par:
Sometimes errors can make their way onto your credit report, and it’s your job to question their validity. Errors can include closed accounts that appear open, incorrect credit limits, and wrong accounts. If you notice errors on your credit report, contact the credit bureau to have them investigated.
Make All Payments on Time
To keep your credit score in the high range, you want to make sure you make all your payments on time. Doing so will positively affect your payment history and your credit utilization ratio (the amount of credit you actually use compared to the amount of credit you’ve been allotted).
Ask for an Increase in Your Credit
If your income has risen and you haven’t missed any payments, you can call the customer service line and ask for an increase to your credit limit. This isn’t to say that you will automatically be approved. In fact, doing this can cause damage to your account, so only ask for an increase on your credit if you’re willing to take on the financial risk.
2 Rebalance Your Debts and Income
One way to increase your income is by including money earned from the part-time work that you engage in. If you sell jewelry on the side or have a part-time job at a hair salon, include that earned income in the money you report to the lending agency.
You can also pay down your debt. Paying down on your debt refers to eliminating whatever debt you can. Do you have a small loan that has been open for years, just waiting to be paid off in one lump sum? Well, pay it off as soon as you can. The same goes for any debts you might owe to collectors. If a debt is negatively affecting your credit report, you should try to have it removed as soon as possible.
3 Check the Lender’s Eligibility Requirements
According to Forbes, finding out a lender’s eligibility criteria can go a long way. When applying for iselect unsecured personal loans, it’s essential to understand their criteria before applying. Often, a lender will do a complex search on your credit report, which can negatively affect your credit. Avoid this by checking eligibility requirements before deciding to apply for a personal loan.
4 Don’t Ask for Too Much Money
When you apply for an unsecured personal loan, you must only ask for what you need. Asking for too much money can lead you down a road of financial risk because you cannot pay for the loan you received. Before asking for a significant amount of money, sit down and think about how much money you need to fix your problem. After all, you should never use a loan for luxury items, such as vacations or shopping sprees, only necessities. Once you know how much you’ll need to solve your problem, and not a penny more, you can apply for a loan.
5 Think About Adding a Co-Signer
Adding a co-signer to your loan may not be an ideal step for you to take, but it might just be the best financial decision you can make. If you were to add a co-signer with excellent credit, work history, and income, there is a higher chance that you could get approved for a loan than if you applied on your own. Having a co-signer with excellent credit could also provide you with lower interest rates. If your spouse has great credit and income, consider adding them to your unsecured personal loan application.
Applying for a personal loan can become a significant financial risk for many people. If you don’t think you’ll be able to keep up with payments or the interest rates are too high, don’t apply for a personal loan just yet. After all, it’s smarter to find another way to pay for something than it is to potentially run your credit into the ground because of missed payments.