People will eventually need to borrow money at some point in their lives. Whether it’s to buy a car, pay for travel, or buy a new home, it’s always helpful and assuring to have a back-up financial resource. When it’s time for you to take out a loan, it’s always a good measure to avoid unpaid balances and maintain a good credit history.
But getting a loan approved can become quite a tedious process. While there may not be a perfect way to get your loan to be approved faster, there are a lot of factors that can help speed up the process. Banks and financial institutions only have one thing in common: to make sure that they lend money to people who meet their requirements. With that said, here are tips you can follow to boost your chances of loan approval:
Maintain a Good Credit Score
Credit score is the number one thing that banks and financial institutions will look at once you submit your application for a loan. Essentially, the higher your credit score is, the better chances you have of getting your loan approved. Even if you’re not planning on taking out a loan, it’s always better to know where you stand in your credit score.
There are, however, mistakes that are made on people’s credit reports. Sometimes, wrong accounts, closed accounts, or incorrect credit limits can significantly hurt your credit score. Be sure to check your standing by taking advantage of the annual free credit report mandated by the federal government. This way, you’ll get to monitor your credit and report any anomalies.
Borrow from the Right Lenders
Before taking out a loan, it’s always important to research lenders and financial institutions. This way, you’ll get to know what they can offer, as well as the payment terms for when you finally decide to borrow money from them. You can also use this opportunity to compare loan options from different lenders and choose the one that fits your budget and payment capabilities.
Don’t Apply for Multiple Loans at a Time
It’s important to note that the main purpose of taking out a loan is to provide you with financial help when you need it the most. Taking out a loan every time you’re offered one can reflect to your credit report. When banks and other financial institutions have the chance to look at your report, you’ll be portrayed as someone who is credit hungry which doesn’t put you in a good place if you’re looking for your loan to be approved faster. It may even lead to the rejection of your loan application.
Don’t Ask for Too Much Money
Know your limitations. Taking out a substantial amount of money when your payment capability doesn’t meet the standard payment terms can reflect badly on you. Banks won’t have any second thoughts rejecting your application and throwing it out of the window.
The best way to know how much you can ask lenders is to think about the reason why you’re taking out a loan in the first place. Have an estimated amount for your planned purchase and only ask for that much. The larger the amount you ask, the higher your repayments will be which will make it harder for you to meet other financial obligations.
Secure a Co-signer or a Collateral
If your credit score hasn’t reached that high for you to get good loan terms, you can ask someone with an excellent credit score to be your co-signer. This will significantly improve your chances of getting your loan approved. Just be sure to have an honest conversation with them and make sure that they understand the risks that come with being your co-signee.
Moreover, securing collateral can also help increase your chances of faster loan approval. It should be comparable to the size of the money you’re planning on borrowing. For instance, you can put your fully-paid vehicle as collateral when taking out a loan to buy needed supplies for your small business.
