Lenders are always interested to know how their customers handle themselves with their previous and current loans before they grant you their loans. And they can do that using your existing credit. Your credit score will tell the lenders exactly what they need to know. So, if you have a low credit score as a result of late payments on your credit card or maybe a different misstep altogether, then getting approved may be a challenge.
That makes it necessary to check your credit report and score and know where you stand before applying for a personal loan. Here are some crucial moves that you can make to improve your chances of landing that personal loan you so desperately need.
- Pull your credit reports
As mentioned earlier, most of the lenders, if not all, will always want to take a look at your credit report. Here, they will have access to all the details of different credit accounts in your name. including your payment history, the amount of debt you owe at the time, plus how recently you applied for new credit. So, if the lender will be looking at all of these details, don’t you think it would be wise to, at least, have a heads up of what your credit report is currently reading? Failure to do so will put you at a serious disadvantage.
You can easily apply for a free credit report online. Once you have yours, the first thing to check is to ensure that all balances are correct in the report. Next, check for any signs of activities that you don’t recognize. If that’s okay too, then you check for any signs of inaccuracies or errors that may be dragging your credit score down. Doing this check before applying for a personal loan and fixing any issues in your report can boost your chances of getting a loan.
- Pay down your existing debt
You may already be cramped with debt like student loans, a car loan, or credit cards. Maybe even a combination of all of them. And knocking a couple of dollars off of those loans can help improve your chances of landing a personal loan. Lenders are also always interested in finding out how much you currently owe and compare it to your total credit line. You can use this to improve your chances of getting a personal loan approval. Remember, you want this number to be as low as you can possibly make it. Minimizing your existing debt is one of the best methods that you can use to boost your score and hence higher chances of getting quick loans. And this also makes the lenders take you as a less risky investment.
- Stop making many new credit inquiries
Any new inquiry that you make for new credit accounts for 10% of your FICO credit score. So, applying for a new credit card or a loan may lead to a drop in your score even if your application isn’t approved.
You can avoid this by, first, shopping around for the lenders in your area and what they are offering. You also need to check out their individual qualification requirements and narrow down to the lenders that you fall within their qualifications. Doing this helps to protect your score from taking that much of a hit. Plus, the chances of having your application approved are also significantly higher.
- Pay your bills on time
Your payment history basically accounts for 35% of your FICO score. That makes timely payments very important. So, if you have any negative remarks on your report regarding a missed payment, then you can wait for the remark to fade before you apply for, and possibly secure a personal loan.