Good NestingPersonal Loan Benefits
You may have heard of personal loans before but are unsure what they actually are. Personal loans are usually unsecured loans not backed by collateral like a car, property, etc. Although it differs according to lender, personal loans max out at $100,000, with same-day funding available in some cases.
What can you use personal loans for? Once again, that could depend on the lender, but people use these popular forms of financing to pay bills, cover medical expenses, repair their cars or purchase new ones, go on vacations, fund weddings, consolidate debt, and more.
The amount of funding and flexibility personal loans provide are just some reasons why so many people apply for them. Other benefits include easy online applications and accessibility to borrowers with fair or even bad credit. Speaking of bad credit, you may worry that it could keep you from getting approved for a personal loan. Follow these tips, and you can wash those worries away by finding the right lender to fit your needs.
Tips To Improve Your Chances Of Getting A Personal Loan
Some of these tips may not be necessary if you have great credit and sufficient income. But if your credit score is low and your income is limited, try doing as many of the following to gain lender approval.
1. Boost Your Credit Score
Some lenders will approve borrowers with credit scores in the 600 range. You should do everything in your power to exceed that.
Your first step to boosting your credit is to check your free annual credit report. Scan it for any errors like incorrect accounts or credit limits. Dispute the errors and get them removed, and you should enjoy a nice credit score boost.
Besides disputing errors, improving your credit utilization ratio and payment history is another way to boost your score. Make some on-time debt payments that exceed the minimum. Also, call the phone number on the back of any credit cards to see if you can raise your credit limit. Don’t use any new credit, though, as the goal is to improve your credit utilization ratio.
2. Apply With A Co-Signer
If the personal loan is urgent and your score is too low to boost right now, see if a friend or family member with solid credit can apply with you as a co-signer. Their good credit can help you get approved and secure a lower interest rate. However, fail to repay the loan, and your co-signer will be on the hook for the debt, so keep this in mind.
3. Increase Your Income
Lenders want to ensure that they’ll get paid back. One way to ensure this is to increase your income with extra hours, a second job, or a side hustle.
Increase your income and pay down debt, and you can make yourself into a more attractive borrower via a better debt-to-income ratio.
4. Prequalify With Various Lenders
To find the best loan without hard credit pulls that can lower your score, prequalify with lenders online by providing the necessary bits of info. This can give you a preview of the loans you could get so you can compare rates and pick the one that fits your needs.
Popular online lenders in the personal loan space include Upgrade, Upstart, Universal Credit, LendingClub, LendingPoint, OneMain Financial, SoFi, Rocket Loans, and Avant.
5. Ask For A Smaller Loan
While personal loans can go up to $100,000, only ask for what you need. A lender may be willing to say yes to a smaller loan, especially if your credit profile isn’t ideal.
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