Whether you’re looking to renovate your home, pursue higher education or consolidate debt, personal loans can be invaluable in realising your financial goals. However, it’s important to recognise that loan approval is not always a guarantee, and rejection can be disheartening.
That’s why it’s crucial to do everything in your power to increase your chances of loan approval. By understanding what lenders consider during the application process and implementing effective strategies, you can minimise the risk of rejection and improve your prospects of approval.
In this blog, we’ll outline seven ways to increase your chances of personal loan approval, ensuring you get fast and easy access to the funding you need.
1. Pay down existing debt
One of the crucial factors many lenders consider when evaluating any loan applications is your liabilities, like personal debt. This can refer to credit card debt or other loans you’re still obligated to pay-off. Lenders may consider these debts as potential risks in limiting your ability to meet your payment obligations (default), not to mention it reduces your borrowing capacity.
By reducing your outstanding debts, you can increase your chances of loan approval. It might be worth paying off high-interest debts before clearing smaller debts with lower rates.
2. Boost your savings
Lenders appreciate borrowers who can show evidence of responsible financial management. By demonstrating your ability to regularly put money aside in savings money showcases your ability to handle financial obligations and establishes a safety net for unexpected expenses.
Aim to have at least three months’ worth of savings stashed away before approaching a lender for a personal loan. Having proof of savings boosts your chances of loan approval and provides a sense of security for both you and the lender.
3. Repair your credit score
Your credit score is a significant factor that lenders consider when reviewing loan applications, as it provides a clear indication of your past financial habits and how responsible you are with money. A higher credit score signifies a lower credit risk, increasing the likelihood of easy loan approval.
Start by obtaining a free copy of your credit report and carefully review it for errors or discrepancies. Dispute any inaccuracies and work towards improving your credit by paying off outstanding balances. Make timely payments on all your credit obligations, including loans, credit cards and even bills, to build a positive credit history.
4. Increase your income
A higher income not only improves your financial stability, but also enhances your borrowing capacity. Consider taking up additional part-time work or freelance opportunities to increase your income.
If you are in a position to do so, it may also be worth looking for opportunities for career advancement through a promotion or pursuing professional development to increase your earning potential. A higher income allows you to demonstrate to lenders that you have the means to repay your loan comfortably.
5. Minimise unnecessary expenses
While we all love to splurge every now and then, reducing unnecessary expenses not only helps you save money but also shows lenders that you are financially responsible and capable of managing your finances efficiently.
Take some time to review your budget and analyse your spending habits, identifying areas where you can cut back. This may involve reducing discretionary expenses, such as dining out and entertainment, or finding more cost-effective alternatives for everyday expenses. By demonstrating your ability to live within your means, you present a more attractive profile to lenders.
6. Select the lender right for your circumstances
While this may sound like a given, you’d be surprised how many applicants don’t take the time to compare lenders! Research different lenders and choose one that aligns with your financial needs and goals. For instance, if you have a limited credit history or specific lending requirements, look for a lender who specialises in these areas.
Approach the lender with a clear understanding of the loan terms and requirements. Maintain open lines of communication throughout the loan application process, promptly responding to any requests for documentation or information.
7. Prepare and organise documentation
When applying for a loan, having all the necessary documentation in order can improve your chances of a fast loan approval. Lenders require specific information and paperwork to evaluate your financial situation accurately. Gather documents such as bank statements, pay stubs, tax returns and proof of assets or collateral.
Ensure you provide complete and accurate information, as any missing or inconsistent details can raise red flags and lead to delays or rejections. By presenting a comprehensive and well-organised application, you demonstrate professionalism and financial responsibility, enhancing your credibility.
Finance One — convenient and fast loan approval for all kinds of borrowers
No matter how hard we may try to secure lending through traditional lenders, sometimes, things just don’t work in our favour. If this sounds like your situation, it might be time to explore alternative options. Specialist lenders like Finance One can be a lifeline for borrowers in such circumstances.
We are a lender specialising in offering personal loans to individuals with poor credit histories or those who have been turned away by traditional sources. As a responsible lender, we aim to provide the best possible solution tailored to each borrower’s needs, offering a clear and empowered path towards achieving your financial goals.
If you would like to learn more about our range of personal loans, please do not hesitate to contact us by submitting an enquiry form or calling 1800 346 663 today.
Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528
*Loans between $50,000 – $75,000 must be asset backed.
**48 hour approvals subject to satisfactory documentation being provided to assess the application.
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
