Even if you have been turned down for a personal loan in the past, there are a number of things you can do to improve your chances of getting one this time around and getting the money you need.
Having been denied a loan in the past does not rule out the possibility of obtaining one in the future. Bad or poor credit history, requesting an unreasonable amount, or even something as simple as typing your name incorrectly on your loan application are all reasons for a rejection. Find out how to make things better by reading on.
Check Your Credit Score First
When applying for a loan, having a bad credit score is one of the most common reasons why you will be rejected. A bad credit score makes a lender presume you are unable to manage money properly, and they may be anxious whether or not you could repay what they have lent you. They will analyse your credit record, which extends back six years and covers everything from credit cards to mortgages, to get an idea of your creditworthiness.
Check your credit record before applying for a loan. If your credit score is low, don’t apply for a loan from a traditional lender because you’ll most likely be turned down. Rather, apply for a bad credit loan or, if you prefer to pay less in interest (these loans have very high interest rates), you can focus on repairing your credit before you apply – in that way, you can be much more sure of being given the money you’ve asked for.
Don’t Ask For Too Much
When you get a loan, a lender will provide you with a lump sum of money, and you repay them over time by making monthly payments until the loan is paid off. The loan itself, plus any interest and fees that may have accrued, will be included in this payback amount. Your capacity to pay back a loan is a major factor in whether or not you’ll get approved for one.
Even if you have a stellar credit rating, it doesn’t mean that you’ll be approved if you ask for too much money. If you ask for more than your annual income, or if the amount you’ll have to pay back will leave you with little to no money each month, it’s likely you’ll be refused. If you ask for a sensible amount, lenders will be more comfortable approving your application.
Make Yourself More Appealing
There are a few things you can do to improve your chances of getting a loan and make yourself more appealing to lenders. That includes:
- Repaying existing debt
- Speaking to a mortgage broker about getting a better mortgage deal
- Showing that you have a clean credit record
- Having a consistent income
Paying off any outstanding debts before applying for a loan is the best option if you don’t need the money immediately. It’s best to wait since you will be in a much better position in the eyes of a lender who will be able to see that you are in control of your debts, and your income will be sufficient to cover your present debt obligations even if you are delayed by a few months.