There may be many reasons why you need to secure a personal loan, and most people who apply for them have no other means of raising the funds to get them out of a fix, secure a better future for themselves or even renovate their home or pay for a wedding. However, if you have a lot of existing debt or a poor credit rating, you might be left wondering if any lender will even consider your application for an online, personal loan.
The following 6 tips are designed to make the process of applying for online personal loans simpler, and help you improve your chances of acceptance:
- Get to grips with your credit report
While not every lender will base their decision on your credit report, all will at least consider it, and as such, it pays to have a better understanding of it so that not only can you see what a lender sees when they look at your finances, but you can get a clearer picture of what type of loan you might be eligible for. Once you’ve read your credit report, you can correct any mistakes that might appear on your file, to potentially boost your credit score.
- Make lenders want to lend to you
The primary concern of lenders is that you can pay back your loan in a timely fashion, and if you can show them this, the better your chances are of securing the loan you need. There are several ways to demonstrate this, and they include paying off any existing debts, and providing evidence of a stable and regular income. Not only will the lender want to see that you can cover the loan repayments, but they’ll also want to see that you can cover your other living expenses, too.
- Shop around
Just as with anything that you buy, it can often pay to shop around and check out multiple options instead of plumping for the first that you come across, simply because it’s convenient. Yes, banks can help you secure a personal loan, but so can many other legitimate lenders, and they may even be cheaper and more suitable for your needs. Do be wary of leaving too many enquiries on your credit report though, as can be damaging to your credit score.
- Use an eligibility checker
Checking your eligibility with soft search tools isn’t harmful to your credit score, and is a good way of shopping around for a lender. Online eligibility checkers will run a light check on your credit file to determine which products you stand the highest chance of being approved for, while not being counted as an actual credit check. When doing this, you can restrict the number of applications you actually make, and apply only to those lenders who are most likely to approve you.
- Get your finances in order
Periodically reorganising your finances is always a good idea, but even more so when you’re considering applying for a personal loan. Knowing how much money comes into your account every month, and exactly what goes out, can help you better manage your life in general, and make you a more appealing prospect for lenders. Once you’ve reviewed your finances, you might try to cut back on spending, or consolidate some, or all of your other debts.
- Recognise your limits and stick to them
While there may be some lenders willing to lend you more than you’ve asked them for, don’t be tempted to automatically agree to this, as the more you borrow, the higher your repayments will be. While you might be able to cope with this initially, what happens if a life event leaves you needing more money than you’ve accounted for and you start missing payments?
Limit your borrowing amount to only what you really need, and you should be much safer that way.
With these tips in mind, you may feel more ready to apply for a personal loan, but still have some questions, such as:
Q. Does it matter what reason I give for wanting a personal loan?
A. Lenders are typically focused upon whether you can pay your loan back and on time, not what you need it for, so don’t get too caught up on your reasons, and just try to be honest.
Q.What credit score will get me a loan?
A. It’s hard to give a definitive answer, but generally speaking, the better your credit score is, the higher your chance of being approved for a personal loan, and get a deal that works best for you. Note that there are loans especially for people with bad credit.
Q. If I’m rejected, will it damage my credit score?
A. Multiple applications, while not recorded as being successful or unsuccessful, may cause lenders to make the assumption that your finances aren’t stable. Carrying out a soft check beforehand will help prevent you from having to make multiple applications, and apply only for those loans you’re most eligible for.
Q. How can I apply for an online, personal loan?
A. With so many ways to borrow money online, you can apply for a personal loan online using their simple application forms and by providing evidence of any relevant documents as requested.
Online personal loans can be immensely helpful at certain times in your life, and thankfully, applying for them couldn’t be easier; simply follow the tips above to give yourself the best chance of approval from your chosen lender
