Today, financial loans have become more accessible than ever, thanks to the exponential growth in the lending institutions and banking sectors. You no longer need to physically go and apply for a loan, you can find a lender online at the interest rate you prefer and get your loan in a matter of minutes. However, with the ease of access comes a set of challenging requirements that you need to fulfill to ensure your loan request gets approved. Details about your credit score and your history as a borrower will be scrutinized by the lenders to control their risk and mitigate their losses. Read on below to find some tips on how to avoid getting rejected in your loan application.
Straighten Out Your Credit Score
A credit score is perhaps the most important factor in determining your status as a loan applicant. The better your score, the bigger your chance of getting approved for the loan. Your credit score is calculated based on a few variables including but not exclusive to:
- Value of your outstanding debts
- How often do you miss a payment?
- How long does it take you to attend to your financial obligations?
All of the above will help calculate your overall score that lending institutions and other parties will use to evaluate your creditworthiness.
To straighten out your credit score, you have to make sure that you’re checking it frequently and take action if/when something seems wrong or inaccurate. Next, make sure you’re paying your bills on time. Finally, whenever possible, try to pay more than the minimum required amount to pay off your outstanding debts, this will help you settle your current debts and improve your credit score, and get approved for your new loan.
Apply For the Right Loan
It’s not enough to evaluate a loan according to your needs without considering the terms and conditions it entails. There are many types of loans and each lending entity will offer you different benefits and mandate different terms. You should also keep in mind the legitimacy of the lender you’re evaluating. In Singapore, one of the world’s richest countries, money-lending is heavily regulated. The professional lenders at https://www.creditthirty3.com.sg/ highlight that you need to ensure that the lender you choose abides by the country’s Moneylenders Acts and Rules which confirms they are a legitimate lender. You should also give yourself enough time to compare between lenders until you find the ones that suit your needs. Most lenders now dedicate a team of customer support representatives to help their customers better understand the features of the loan they’re applying for.
Improve Your Debt-to-Income Ratio
Many lenders will request a debt-to-income report to assess whether you’d be able to commit to timely payments or not. If you know that you’re eligible for a salary increase, hold off your loan application until the increase is reflected in your monthly income. In addition, you may want to take on a second job that would boost your income and make your debt-to-income ratio seem more favorable to the lenders. Simultaneously, you should consider lowering your debts. You can use any assets that you can liquidate to pay off your outstanding debts and write them off of your financial reports. A low debt-to-income ratio will encourage employees to approve your loan as it’s proof that you’ll be able to pay off your monthly interest and settle your loan in time.
Don’t Ask For More Cash Than You Need
This is a common mistake that loan-applicants commit and ends up costing them their requested loans. Lenders don’t trust borrowers who ask for more money than what their applications show they can comfortably afford. Even if you know for a fact that a new financial obligation will come up soon and you want to be prepared, it’s still not worth the risk. Apply for the amount that you only need for now then deal with whatever comes later on.
Bring On a Trusted Co-Signer
Having a co-signer with a stronger credit score than yours will boost your chances to get the loan you desire. Find someone you can trust and be honest with regarding your financial stance. It’s your responsibility to disclose your financial situation to your potential co-signer so they can decide whether they’d be willing to take on the associated risk or not. Your co-signer will share the same responsibility as yourself to repay the loan so they have to understand what they’re getting into.
Applying for a loan is a stressful decision no matter how sure you are of your ability to repay it. However, when you approach it armed with the above information, the whole thing will be far less challenging. Take your time and check off each item to go with a newfound confidence that your loan application will be approved.