Unsecured personal loans can be a wise alternative to credit cards for a large purchase or expense because the interest rate is typically less. Unlike a home or car loan, however, an unsecured personal loan does not call for borrowers to use collateral. Without this form of guarantee, lenders instead must base their decision on your credit worthiness and ability to repay. If you have never before applied for a personal loan, or you have applied only to be rejected, the following tips can help you improve your chances of being approved.
Pull your credit report before making application
Unsecured personal loans are most often offered to people who can show they have strong credit or steadily improving credit. In addition to checking your credit score before making application to see where you stand, it is also wise to obtain a current copy of your credit report. Doing this will give you a chance to check for any erroneous or problematic information the report may contain. If a problem is found, taking time to dispute errors and resolve any reported issues can help lenders view your application more favorably.
Provide stable income and employment information
Another key factor in getting approved for an unsecured personal loan involves showing the lender that you have sufficient income to repay the loan. Lenders will need to see that an applicant is employed in a job or earns business or other income in an amount sufficient to meet their expenses plus the personal loan payment. In addition, lenders will be more likely to lend money to someone who has a more stable employment history than they would to an applicant with an erratic one.
Apply with a lender you already know
Like many lending situations, opting to apply for an unsecured personal loan through a lender with whom you already have a connection can help you win approval. If you already have checking, savings, or other types of accounts at a particular lending institution and the experience has been a positive one, your application for a personal loan may be reviewed more favorably.
Consider using a cosigner
If you have reason to believe that your application will not be approved due to problems with your employment history, credit rating, or another issue, consider asking a creditworthy parent, sibling, or friend to act as a cosigner. For additional ways to improve your chances of getting an unsecured personal loan application approved, take time to candidly discuss your situation with a lender in your area, such as at Frontier Community Credit Union.
Share27 December 2018
When I started thinking about my life, I realized that I was spending a lot more money than I should be every month on little extras. I wanted to streamline things, so I decided to start focusing on getting my finances in order. I started looking around my house, and I was pleased to discover that there were more than a few things I could sell for a little extra cash. I put them online, and I was amazed to see how quickly they sold. After selling some things, I was able to get my finances in order, which was a huge relief. This blog is all about getting your finances in order.