Loan approval may seem an elusive goal if you’ve applied a few times and lenders have turned you down. Luckily, you can improve your odds with a bit of preparation.
Personal loans are the usual choice when most people are looking for money. Most are unsecured and don’t require security or collateral. This makes the process much more straightforward and more likely you’ll get an easy loan approval.
Additionally, when you choose the right personal loan lender, you won’t face usage restrictions. If you get an instant loan approval you can use the funds to pay off credit card debt, move, repair your home, or even buy a vehicle without saving a down payment straightaway. Fortunately, interest rates on most personal loans are fixed, so you needn’t worry about interest rate hikes either.
Nonetheless, you can’t always get loans approved instantly or sidestep the likelihood of a loan denied unless you go about it the right way. Improve your chances of an instant loan approval by following the 12 tips below.
1. Check All Three Credit Reports
If you’re can’t get approved for a personal loan, start with your credit reports. The U.S. has three credit reporting agencies and each produces a report on your credit details. These reports provide the core information used in your credit score calculations.
Luckily, U.S. residents can get free copies of all three once a year at AnnualCreditReport.com. This is the authorized website for this information. Review each report for suspicious activity and dispute errors.
2. Fine Tune Your Credit Scores
Once you’ve done what you can with your credit reports, it’s time to improve your credit scores. Most lenders rely on these numbers to decide whether you’ll get your loan approved, or not. Fortunately, you have many ways to improve your credit score and even small improvements can make a huge difference.
Many lenders consider a credit score of less than 640 risky and they may not grant you a loan. However, some lenders have less stringent requirements. As an example, they may place less emphasis on credit and more on your steady recurring income. This may improve your chances of an easy loan approval if you have less than perfect credit.
You may also want to consider an online lender, rather than a brick-and-mortar one. A good online lender may offer products that fall outside of the scope of traditional lenders. For instance, they may not worry as much about long-term job stability or set a lower minimum income requirement.
3. Reduce Your Debt
Your debt-to-income ratio is another factor you need to look at if you want to get your loan approved. Debt payments over 35% of your income can be a red flag for most lenders. Certain lenders may offer you a loan if your DTI is higher, but you will also pay more.
Create a debt repayment plan and stick to it. Some people choose to pay off small debts first while others tackle those with the highest interest rates. Choose the strategy that works best for you and lower that percentage. Once you’ve got your DTI at a manageable level, you can reapply.
4. Increase Credit Limits
Your credit utilization rate measures your available credit against how much is still available on your:
- Credit cards
- Personal lines of credit
- Home equity lines of credit
- Other revolving credit accounts with balances
In general, a lower utilization rate improves your credit scores. You have two options to lower it – decrease your balances or increase your credit limits.
If your account is in good standing and it’s been open for a while, the creditor may raise your credit limit. However, you will want to update your income before you make the request.
Be careful with this method, because credit limit increase requests sometimes lead to a hard inquiry. These hard inquiries can temporarily lower your credit scores. Ask the creditor beforehand.
5. Don’t Apply For Many Loans At The Same Time
As mentioned, hard inquiries can lower your credit score. Too many of them and it can look like you’re struggling to obtain credit.
Luckily, you can avoid this if you choose potential lenders that offer prequalification. This involves a soft credit inquiry which does not affect your credit score.
6. Prequalify Through Select Lenders
Prequalifying is the best way to get loans approved instantly. It is low risk and a great way to compare what’s available to you.
Not all lenders offer this method and it does not guarantee you a personal loan. However, when you’re honest and thorough it does make it more likely you’ll enjoy an easy loan approval.
Luckily, preapproval usually occurs online and only takes a few minutes. A well-chosen lender offers fast, completely safe online personal loans and a lightning fast pre-approval process .
7. Check Your Application Carefully
When you’ve decided to prequalify through a particular lender, be methodical and complete all sections of the application form. Don’t omit details and be truthful. We live in electronic world and its easy for lenders to check your information.
Some lenders ask for banking information to verify your income instantly, instead of providing paper documents. Don’t skip this as this information is key to instant loan approval.
8. Don’t Ask For Too Much Money
Borrowing today can be convenient and simple. Nonetheless, borrowing too much can also be troublesome.
Don’t add extra money to your requested loan amount, “just in case”. The more money you request, the higher the lender risk. Besides that, you have to repay what you borrow, plus interest. If you want to maximize your chances of loan approval, you’ll have better luck trying to qualify for less.
9. Check Lender Requirements Beforehand
Before you start applying for loans, check each lender’s requirements. They may have age, income, credit score, or residency needs that you may not meet.
Avoid rejection for trivial reasons, research lenders beforehand, and bolster your odds of loan approval.
10. Choose a Longer Term
Most people want to pay off their debt as quickly as possible. Consequently, you might choose the shortest term you think you can handle when you apply for a loan.
Unfortunately, this may not work in your favor when you’re looking for fast approval loans. Lenders want to see a comfortable margin between what you earn and your loan payments to manage unexpected expenses. A longer term leads to lower payments too.
11. Add a Cosigner or Co-borrower
In some cases, you may have no other option than to ask someone to help you qualify for a loan. Luckily, using a cosigner or co-borrower often leads to loan approval since their good credit supports your application.
Just remember, you must honor your loan agreement or the other person will be on the hook for your debt. That’s a great way to end a once happy relationship.
12. Choose The Right Lender
Now that you’ve done the research and prequalified through potential lenders, you can clearly see what is available to you. Even so, you may not want to settle on a lender based on interest rates alone, even if they offer quick approved loans.
Other factors to consider include:
Lender licensing – check that the lender carries a valid license in your state.
Origination fee – some lenders charge an unnecessary fee for setting up your account. It is usually calculated as a percentage of your loan amount.
Prepayment penalties – some personal loans include unnecessary prepayment penalties. Always choose an “open” loan, because you can pay extra at any time, without penalty.
Loan application process – if you’re looking for fast approval loans, check the lender’s loan process. You should be able to complete their application form in minutes and get a response that quickly too.
Income verification process – lenders that get loans approved instantly usually rely on digital income verification, rather than document uploads.
Income source – many lenders only consider applications from those with full-time employment. If you earn your money through contract work, self-employment, a pension, or disability, check they accept this income.
Funds release timeline – quick approved loans should come with a quick release of funds too. Check how long the lender takes to get money into your hands once you’re approved.
Loan term – lender offerings vary greatly. Ensure the lender offers you sufficient time to repay your loan so you can comfortably manage your payments.
Bottom Line on Loan Approval
Clearly, you have many opportunities to maximize your chances of loan approval. Of course, one of the most important is the lender you ultimately choose.
If you live in Missouri, you will be happy to know that FlexMoney offers fast installment loans online, without the hassle. Borrow between $200 and $2,000, with one year to repay.
Our process is convenient and suitable for most lenders, even if you have bad credit. More importantly, qualifying for a loan is much easier. We’re a seasoned, licensed lender known to get loans approved instantly, so why wait? Get pre-approved and funds in hand, as soon as today.