1. Read your credit report
Having a grasp of your credit report will help you better understand your financial situation as a lender sees it, and help you determine what type of loan you’re most likely to be eligible for. Checking your credit report also gives you the chance to fix mistakes or errors that might be on your file. Fixing these before an application can help give your credit score a boost.
2. Make yourself as attractive to lenders as you possibly can
There are a few things you can do to make yourself more attractive to lenders. Some options include paying down existing debts, showing you have a stable income that can cover the loan repayments and your other living expenses, alongside other ways to showcase your positive credit history. If you don’t need the money straight away, make sure you spend the months leading up to your application showing your responsible borrowing behaviour (by paying on time, in full, each month).
And before you apply make sure you have all the information that is needed for your application.
3. Compare your options
It can be easy to just go to your bank branch, but there are more options out there that may be cheaper and more suited to you. Research different lenders to see what they can offer you, but make sure to not leave too many enquiries (hard searches/applications) on your credit report, as it will leave a negative mark and can damage your credit score. Many lenders and brokers have loan calculators, so you can easily check what your repayments would look like for borrowing different amounts (over different terms and with different APRs).
4. Consider a bad credit loan
If after becoming acquainted with your credit report you realise that you may be seen as having bad credit, you may need to consider a bad credit loan. Be aware however that bad credit loans will offer a higher rate than a standard loan, but if you aren’t being approved this may be your only option.
5. Check your eligibility
The best way to shop around without damaging your credit score, is to use eligibility checkers (also known as soft search tools). These will run a light check on your credit file to tell you which products you’re likely to be approved for, without actually counting as a credit check, so therefore not damaging your score. The idea is that you can then limit your actual applications, as you can just apply to a lender likely to accept you.
6. Re-organise your finances
Getting your finances in order, as they say, shouldn’t be a job reserved for the end of your life. Making sure that you know exactly how much money you have coming into your accounts, and where the money is going out, will make you better prepared for multiple life events.
Looking at your finances as a whole will allow you to make yourself more attractive to lenders, you can cut back on spending or consolidate your other debts.
7. Don’t over borrow, know your limits
If you shop around and have a good credit score you may find lenders willing to lend you more than you are asking for. Just because you can borrow more, it doesn’t mean you should. If you limit the amount you borrow to just the amount you need, this will mean that your repayments are lower and therefore reduce your exposure to potential problems if your circumstances were to change.
What reason should I give for a personal loan?
There is no perfect reason you can put on an application that will guarantee you get accepted for a personal loan. Lenders are generally more concerned with your ability to pay the amount back, and your previous trustworthiness around borrowing money, rather than what the money is for.
The important thing is to be honest, most people take out loans for things such as paying for a wedding, home renovations or a car, so let them know your personal reasons. A lender will not give a loan to you if you intend to use it for illegal activities or gambling.
What credit score do I need for a loan?
There is no exact answer, as there are options for most credit scores. Ultimately, the better your credit score the better chance you have of being accepted (with a stronger APR), which means you are more likely to get the best deal for you. If you have a less-than-ideal credit history, it could be a good idea to look at loans specifically for people with bad credit.
Will being rejected hurt my credit score?
Any application for credit is noted on your credit file, but it’s not recorded as successful or unsuccessful. However, if you have multiple applications lenders will often read between the lines, and presume that you are unstable with your finances.
Soft checking beforehand will help prevent multiple applications, so only apply for loans that you have a strong eligibility for.
How can I apply?
There are so many different lenders offering different options and you can read through the details and apply online for most personal loan products.
At Ocean Finance we have a panel of lenders that we compare to your personal circumstances to find a product that is suitable for you.
Read our complete guide on applying for a loan here.
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Intelligent Lending Ltd is a credit broker working with a panel of lenders.