If you are in need of funds to finance your personal expenses like a vacation or a wedding, you may have considered going for an unsecured loan. Also known as a personal loan, this is a loan where the lender does not require you to place collateral that could be repossessed in the event you default payment. Often, these kind of loans are charged interest rates that are higher because they are given without collateral and are only based on a borrower’s reputation. If you are looking for a personal loan, here are several tips to have it approved within the shortest time possible:
1.Know the kind of personal loan you want
Most people think that personal loans refers only to closed end loans. However, there are other loans that fall within this category. They include mortgages, auto loans, credit cards and payday loans. When seeking a personal loan, be certain about which of these loans suits your needs. Lenders tend to switch to secured loans when they realized that your credit is not strong enough to support the high interest loans they attach to personal loans or when you do not qualify for the loan. This can be risky because it means you might lose your property in the event you default payment.
2.Work on improving credit scores
If you have been watching msnbc, you probably know that credit scores are not permanent. There are steps you can take to improve them before submitting an application for a personal loan. This is critical when your score is very close to the following credit classification bracket. For instance, if you have a score of 680, improving it to 700 would increase your possibility of getting a loan approval, saving you lots of cash if you qualify for a lesser interest rate. To improve your score, be sure to always make timely payments for the bills you owe and reduce your debt levels. Where you have a negative item on your history like a late payment, you may want to wait for six months while ensuring you do not have another late payment.
3.Review your credit score
Trying to apply for a loan when you know you do not qualify for it is trying out luck. Each time you make an application for credit, it reflects on your credit report and does not help your credit score. Where the application is turned down, it may be reflected in the loan applications you make in future and could raise red flags to lenders. The best thing to do it to always get a credit report from a reputable company once every year and ensure that the report does not feature any inaccurate or untrue statements. Once you have the right credit information, engage the lender on the guidelines that apply on loan application assessments before submitting your application.
4.Consider debt to income ratio
It is always advisable to apply for the lowest possible amount while ensuring that you don’t over report or under report your income. This works best because some occasions, loan officials overlook credit score borderlines or other requirements when your income is way higher than the amount you are requesting for. Unless you are required not to, apply for a loan based on earnings before tax and ensure that you include all income sources. Where allowed, consider including the income of your spouse as well.
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