How to apply for a loan

Step 1: Check your credit score

You can check your credit score for free with the three main credit reference agencies in the UK: Experian, Equifax and TransUnion.

Your credit score shows lenders how creditworthy you are based on your past financial behaviour.

If you always pay your bills on time and stay well within your credit limit, then you’re likely to have a good credit score, and may find it easier to get a loan.

If you have a low credit score, you could still get a loan. Your options may be limited, and you could face higher interest rates. You could either look into getting a bad credit loan, or try and improve your rating to boost your chances of approval before you apply.

Step 2: Decide how much you need to borrow

Make sure you only borrow what you need and can afford to repay. Pay on time, every time, to build up a good credit history and avoid late payment fees.

Step 3: Consider how long you want to borrow for

Spreading repayments over a longer time may mean lower monthly repayments, but you could end up paying more in total, due to interest.

Step 4: Compare loan types

Do you want a secured homeowner loan or unsecured personal loan? It’s best to weigh up the pros and cons of each loan type before you decide.

Homeowner loans

If you’re a homeowner, you may be eligible for a homeowner loan, where you use your property as security. This could give you access to larger sums and lower interest rates compared to a personal loan, but your home could be at risk if you fall behind with the repayments (in the worst-case scenario).

Personal loans

An unsecured personal loan may be more suitable if you want to borrow a smaller amount, aren’t a homeowner, or don’t wish to use your property as collateral. The lowest interest rates are usually offered to people with high credit scores.

Step 5: Check your eligibility for a loan

Your eligibility depends on the lender and your individual circumstances. You can use an eligibility checker like ours to see your chances of approval before you apply.

We’ll search all loan options available on our panel of lenders, to find the most suitable one for your needs - without affecting your credit score. You can leave the hard work to us.

Each UK lender has different criteria, but most need you to be:

• aged 18 years or older
• a UK resident

Lenders also usually look at your:

• credit score and credit history – to see if you’re a reliable borrower.
• ability to repay a loan – based on your income and outgoings.
• employment status – you may find it easier to get approved with a steady source of income.
• credit utilisation - the percentage of your total available credit that you’re using. The lower it is, the less reliant on credit you’ll appear to lenders.
  
  

Step 6: Prepare your documents

The exact information you need to apply for a loan varies between lenders, but common documents include:

• proof of identity – e.g. your passport or driving licence
• proof of income – e.g. recent wage slips or benefit documents
• proof of address – e.g. a recent utility bill or bank statements

Step 7: Fill out a loan application form

Most of the time you can apply for a loan online, but depending on the lender, there may be the option to apply in person.

Here at Ocean, most of our personal loans are processed online. If you wish to apply for a secured loan, you’ll receive a call from one of our friendly, qualified advisers to finalise your application.

Each lender has their own requirements, so they may ask different questions. Typically, you will be asked to provide personal details, such as your:

• name
• date of birth
• contact details
• current address and previous addresses
• employment status
• income
• outgoings (e.g. rent or mortgage payments)

If you are applying for a joint loan, the joint applicant will need to provide the same information and paperwork. The lender will also check their credit report to see if they are eligible.

What to expect after submitting your application

After you apply, the lender will:

• review your application form
• run a hard check of your credit report - this may cause a temporary dip in your credit score
• review any information they may have about you - if you already have a product with them
• see if you meet their eligibility criteria

Following these checks, the lender will let you know their decision.

If you are approved for a loan, that’s great news! Make sure you are happy with the terms and conditions before you sign the loan agreement.

If one lender declines your application, another may accept it, as different lenders have different criteria. As a rule of thumb, it’s best to leave around three to six months between credit applications, so that you don’t appear desperate for credit or harm your credit score.

How long does it take to receive a loan?

With Ocean, you can get a quote in minutes and see the rates you qualify for. Once your application is approved, you may receive the loan funds on the same day, or it could take a few weeks to hit your bank account.

The exact time it takes can depend on:

• the lender – online lenders tend to be quicker
• whether you are an existing customer – this could speed things up
• if you need to share any documents with the lender – and how quickly you send them over
• the type of loan you’ve applied for – personal loans can take between a few hours and two weeks to receive, whereas secured loans usually take up to four weeks.

It’s worth checking with the lender if you need a clearer idea of their timescales.