8 Tips to Increase Your Personal Loan Eligibility
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1. Determine What Type of Personal Loan You Need
As you hear people talking about personal loans, they are talking about unsecured, closed-end installment loans. From a technical perspective, lenders consider mortgages, auto loans, payday loans, and credit cards personal, which is contrary to business loans. Moreover, it’s wise for you to know what type of loan you’re applying for.
Lenders typically offer secured loans for individuals who do not qualify for loans with prime interest rates.
For instance, if you give your home or vehicle up for collateral, you can qualify for mortgage, title, or home equity loan. Moreover, keep in mind that since these are secured personal loans, your home and/or car is at risk of being taken if you fail to pay back the loan.
2. Know Your Limitations
If you want a loan, you should already be aware of your credit history and score. Your bank of choice should be able to tell you the credit requirements of the loan you’re applying for. It’s best to be proactive in obtaining your credit score report and score multiple weeks before applying. Moreover, look over your credit report and review it to ensure there aren’t any inaccuracies.
Lenders heavily take your credit report into account. If there are errors on your credit report, it could cost you your loan approval. Remember to always take into account your financial status while preparing to apply for a loan. Moreover, apply for a loan that you know you can afford to pay back effortlessly.
3. Create a Checklist
It’s crucial for you to craft a checklist of the information you need, which is based on the information from the bank.
In addition, it can take some time for you to obtain the documents you need from creditors, your employer, and other financial resources. If you don’t have all of the information you need, the lender can deny you easily.
4. Improve Your Credit Score
Your credit score doesn’t always stay the same. Moreover, it’s important for you to take actions that will improve your credit score; especially if your credit score is near the next bracket.
- Excellent Credit 760+
- Good Credit 700+
- Fair Credit 640+
If you have a credit score of 770, improving it to 780 is not worth your time. On the contrary, if your credit score is 680, increasing it 770 is a significant improvement which will increase your chance of getting approved. You will also save a lot of money because you’ll have better interest rate options.
The best way to improve your odds of getting approved is to always pay your bills on time and reduce your debt-to-available-credit ratio.
If you have negative remarks or late payments on your credit report, it’s best to wait for six months and not miss payments to improve your odds of getting a loan. Moreover, having a good relationship with your lender is an advantage if you have a negative item on your credit report. Write the lender a nice letter asking him to remove the negative remark.
5. Apply in One Bank At A Time
We advise you to not apply for multiple loans all at the same time. It’s best to see if one or two lenders will approve of you getting a loan. Whether you know it or not, applying for multiple loans shows up negatively on your credit report. Lenders don’t like that at all because they consider you a risky borrower. More than likely, the lender will not approve your loan application.
6. Ask questions
When you find a loan that interests you, contact the bank personally to find out the eligibility requirements.
Also, it may be necessary for you to make an appointment with the loan officer so he can go over the required materials, documents, and timelines in order for you to continue with the loan approval process. Every bank has its own requirements. This is why it’s important for you to know them upfront for preparation purposes.
7. Be Honest
Honesty is a vital attribute you have to have in order to get approved for a loan. If you are dishonest during the application process, lenders will deny your application as they evaluate your credit score and history.
It’s very important for you to be upfront and honest throughout the loan application process.
For instance, if you are honest with us but not successful with getting a loan, you are in a good position for us to help you in your financial situation so you can apply again in the future. It also positions you to be seen as a responsible and respectful borrower.
Furthermore, if you are not honest throughout the application process, lenders will not approve your loan application. This will also prevent you from getting credit from other lenders in the future.
8. Add Spouse/Parents as Co-Applicants
A lot of people do this to add more weight to their loan application.
Adding a family member to your application not only adds fuel to the fire, but it also gives the lender an extra sense of security that you will repay the loan. As a result, you’ll get the amount you desire to have.
Source: infoforinvestors
Financial Capital Group, LLC is a lender that provides home and commercial finance solutions for business, professionals, individuals and families since 1999. Our love and care for others is directed as much within our walls as it is outside of them. Our desire is to work together to meet the needs of our customers.
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