A personal loan can be used for a variety of purposes including consolidating debt, taking a vacation or paying taxes. They are designed for those with poor credit as well as for those who have good credit. What are some steps that you can take to ensure that you aren’t denied for the personal loan that you have applied for?
Make Sure You Apply for a Loan That Fits Your Credit Profile
If you have a credit score of 500 or have several missed payments in the recent past, you shouldn’t expect to get a loan from your bank or credit union. Instead, you should apply for a loan from a bad credit lender. You may also have to be flexible regarding your loan terms if you have a low income, are self-employed or don’t have an extensive credit history even if it is a positive one.
Can You Secure the Loan?
As a general rule, a secured loan is easier to get than an unsecured loan. This is because the lender has better odds of seeing his or her money back compared to a loan that is secured only by the promise of the borrower to pay it back. You can use your home, a car or any other valuable asset to secure a loan. In some cases, a borrower may secure the loan with a cosigner who pledges to pay the money back if the original borrower is unable to do so.
How Much Are You Asking For?
A borrower who asks for $50,000 despite having no assets, little income and a lot of debt is unlikely to get his or her request approved. However, it may be possible to get a loan for $5,000 with the understanding that future loans could be worth more if this one is repaid on time. Typically, a lender will tell the borrower ahead of time how much he or she is approved for prior to deciding whether to accept the loan.
Don’t Make Too Many Loan Requests at Once
Each time that you fill out a loan application, you have an inquiry placed on your credit report. If a lender sees that you have too many inquiries, it may raise some questions about your ability to obtain or manage credit wisely. Ideally, you will limit loan requests to no more than one every six to 12 months.
Getting denied for a personal loan be a blow to your ego or put you in financial dire straights if you needed the money to pay a bill today. However, even if you are denied, it doesn’t mean that you can’t ask another lender for a loan or apply again in the near future if you overcome the issue that led to the denial.