It is often necessary to borrow money, and this has been brought into focus by the Coronavirus pandemic as a large part of the population have lost their jobs or find that their financial circumstances have changed.
However, for many people, it can be a challenge to borrow money because they may have a terrible credit history, they don’t have a bank account, or they have no assets to secure the loan against. All is not lost, though, as there are several ways that you can go about increasing your chances of receiving a loan, so read on to find out how.
Know Your Credit Score
When you apply for a loan, the first thing that the loan company will do is check your credit score, and if it is not high enough then the chances of you being granted a loan are pretty minimal. This means that it is vital that you know your score well in advance because depending on how high your score is, you will have to approach different lenders as they don’t all have the same criteria for lending. Bear in mind, though, that the lower your score, the higher the interest rate will be and the lower the amount that you can borrow, so it is always worth doing as much as possible to increase your score so that it is more likely that you can borrow money. Make sure you shop around and then you will increase your chances of finding a lender that is prepared to advance you a loan.
Correct Your Credit Score
When you review your credit score it is very common to find erroneous entries that drag your score down. If you happen to be in this position it is crucial that you contact the agency and you go through the correct procedures in order to have the false markings lifted from your report. There are several reasons why these may be there in the first place, from miscommunication to others at your address having their entries applied against yours, but in reality, it doesn’t matter how they got there, it is just important to do all that you can to have the black marks removed so your score jumps up, increasing the chances of you being granted a loan.
Have The Right Documentation
Having the right documentation is paramount if you want to increase the chances of you being awarded a loan, and it will also speed up the process if you can furnish the documents in a timely manner.
Make sure you have a spreadsheet with your detailed monthly expenditure on it and have pay slips, bank statements, and all your monthly bills to hand because the lender will require these to make an assessment. Do not hide anything as this will only come back to haunt you as the lender will find out about your circumstances so it is much better, to be honest from the outset.
Check Your Eligibility
When you apply for a loan a mark is made on your credit score, and the more loans that you apply for that are declined, the lower your credit score will be, making it even more difficult to secure funds. The experts from Lucky Loans recommend that you check all eligibility criteria in advance and that you apply for loans that fit your criteria, otherwise you will only be doing yourself more damage in the long run. Do not apply for a loan that is more than the amount you require and use eligibility calculators before you approach any loan company if you want to improve your chances of receiving the loan.
If you are really struggling to get a loan approved, one technique that is slightly outside the box is to supply the loan company with references. These could be from your mortgage company or landlord showing that you always pay your mortgage or rent on time, or they could be a personal reference from your employer. You could also take documents that prove that you pay your utilities in a timely fashion. Some lenders will not regard these sorts of documents, whereas others will, so it is always worth trying if you really need to borrow funds.
As we have learned there are several ways to increase your chances of securing a loan. Make sure you are familiar with your credit score and if necessary have any erroneous entries amended. Have the correct documentation to hand and make sure that you check loan eligibility in advance because if you are refused a loan a black mark will go on your credit score. Finally, think about giving references to support your cause, and all being well you will be lent the funds that you need.