5 ways to improve your chances of obtaining a personal loan
In the last couple of months, covid-19 has not only claimed countless lives but also bludgeoned economies around the world; forcing countless others to the brink of poverty. Thus, people around the globe, now face various forms of financial threats ranging from repayment of existing debts to purchasing even the most basic necessities of life.
Thus, at such times, for those of us with no form of savings, opting for a personal loan is probably the most pragmatic solution. After all, these loans are not only unsecured (meaning they don’t require any collateral) but also have extremely affordable interest rates. Now I know what most of you must be thinking: “How can he ask us to borrow more money?” or even along the lines of “Is he the one who is going to pay the interest rates?” But trust me when I say, “At this moment, small personal loans are your best way out of this pinch.”
So, now if you have made up your mind and want to borrow some capital, I am here to help you get that cash as quickly as possible. However, to get that loan amount approved, we need to work on your loan eligibility criteria. So, without any further ado, here are the five best ways to improve your personal loan eligibility:
Only borrow what you need
This is like the first golden rule of applying for a personal loan. After all, financial institutions are already taking a huge risk by approving you an unsecured loan amount. Thus, when you seek more than what you need, you are only increasing that risk factor and reducing your loan approval chances.
You can also boost your personal loan eligibility by justifying the reason for financial assistance and the overall loan amount. By doing this, you generate a sense of trust with your lender; as you only tend to borrow the required amount of money, which you can easily repay.
Work on that credit score
Telling you to work on your credit score before applying for an unsecured loan must be a no-brainier at this point. After all, it is your credit score that financial institutions thoroughly scrutinize, while determining the fate of your loan application. Hence, the higher your credit score, the more are your approval chances.
Although, improving credit score takes a fair amount of time and efforts, but it is extremely easy, and you can easily do so by following these 3 simple tips:
- Get a copy of your credit report at least once a year and check for any possible discrepancies. For more than often, it is incorrect information, such as wrong credit limit, closed account, etc. that hurt your credit score the most.
- Further, you can also increase your overall credit score by paying your bills and EMIs (equated monthly installments) on time.
- Also, make sure that you avoid opening new credit accounts unnecessarily. Because, new credit accounts often result in more spending power, which in turn tempts you to splurge and accumulate more debt.
Maybe, consider a co-signer
Your personal loan eligibility is directly propositional to your repayment capability. Thus, it only makes sense that you increase that repayment ability by boosting your credit and income source with the help of a co-signer.
What is a co-signer, you ask? A co-signer is a person who agrees to become equally responsible for the repayment of the loan amount that you need to borrow. Thus, it is only fair that he or she needs to have a good credit score and income source.
However, make sure that you inform the person about the risks involved before he or she agrees to become a co-signer.
Find the right lender
The saying, “if something seems too good to be true, it most probably is,” is something that every person must remember when looking for the right lender.
After all, there are hundreds of lenders, if not thousands, providing financial assistance to anyone and everyone with a decent credit score to back them up. However, the interest rates, processing fees, and other charges that you incur along with your principal amount differ from one lender to another. Further, there are a lot of payday loans out there, specifically designed to put a dent on your wallet and loot you in broad daylight! Thus, keeping your eyes open and scrutinizing every minute detail is a must when looking for the right lender.
Additionally, eligibility criteria for obtaining personal loans vary from one financial institution to another. Therefore, the right lender for you is most probably the one that offers you with your choice of loan amount at the lowest interest rate possible.
Don’t ever file multiple personal loan applications
Applying for multiple loans with the hope that at least one of them will be approved is completely naïve. Because, by doing so, you make the lenders believe that you require multiple loans to take care of your expenses; thus, forcing them to question your repayment ability in the first place.
Further, adding insult to the injury, with each personal loan application that is rejected, your credit score further spirals down the rabbit-hole!