A personal loan is one of the quickest ways you can get additional funds which you can use for a variety of reasons: to pay for your upcoming holiday, a medical emergency, credit card debts, or even a previous loan.
But whether you are applying for your first loan or have been granted one in the past, there is always the possibility that your application for a new one can be rejected. If you want to be sure your application for a personal loan won’t be refused, here are five important tips you have to follow:
1. Know the lender’s credit rating requirement
For many lenders, an applicant’s credit score is the first and most important factor they consider. This is especially true if the application is for an unsecured personal loan.
To be sure your credit score won’t be the cause behind your failure to get additional funds, ask the bank or lending agency what their required score is. Next, check your credit score by using an online tool or an app.
If your credit score meets their requirements, you’re off to a good start with your loan application. If not, you will have to postpone applying for a loan until you can improve your score and meet the requirement.
2. Check the lender’s minimum income requirement
Lenders have a minimum income requirement for all loan applicants as well. They want to be sure that the people they will lend their money to have a steady source of income and are capable of repaying the loan.
If your preferred lenders do not specify on their website or ads their required amount of monthly or annual income, call them up or send them an email asking about it. You can also visit their office or branch to get more details about this particular requirement.
3. Ensure you have no outstanding loans or large debts
Even if you have a stable job and your income meets the lender’s requirements, if you are still paying for at least two other loans and three or more credit cards, it is highly likely that the bank or lending company will reject your application.
To avoid having your next loan application disapproved, it would be best to finish repaying any loans you have now before you apply again. You will also do well to surrender the credit cards you are not using to avoid the temptation of using them and incurring more debt.
Lastly, always make sure you settle your loan and credit card payments on time every month. On-time exact or more-than-minimum payments (for credit card bills) will help improve your credit score significantly.
4. Prepare and submit all required documents
Applying for a loan entails submitting several documents that verify your work address and residence, employment or source of income, and other personal information. If you don’t submit all these documents at the time of your application, it will cause the lender to delay their decision regarding your request.
And even if you are in a rush to get a loan, never submit falsified or forged documents to expedite the process. Lenders always check all documents they receive, and if they find out your documents are fake, your application will be rejected right away.
5. Put correct information in the loan application form
Whether you are applying for a loan online or personally at the bank or lender’s office where you have to fill out several forms, make sure you place the right details on these forms. It is also important that you provide sufficient information as well.
When you are applying for a loan, you never want the application form returned to you several times simply because you placed wrong or insufficient details.
Make sure you are honest with your answers as well. If you are asked if you have an outstanding loan, say yes. There is no use denying it since the bank or lending company will find out anyway.
Lastly, before submitting your application, double check the forms you have completed and your documents. Make sure you have answered all the questions and provided all the details asked of you. Ensure that all the information you provided is in accordance with the details found on the documents you will submit.
Aside from meeting all the lender’s eligibility criteria, you will still have your work cut out for you when you apply for a personal loan.
Remember that even if you are in dire need of a loan, avoid taking shortcuts. Comply with all the requirements the legal way, and always be honest with the information you divulge in your application.