A personal loan can help pay for significant expenses like home improvement, a new car or a holiday. Review your finances and take steps to increase the chances of getting your loan application approved.
For example, Alex – personal loan offers one of the best interest rates in the market. With an above-average credit score, one can get an even better deal on a personal loan.
The article will take you through a few hacks that can help you with the personal loan application and approval process.
Table of Contents
10 Personal Loan Hacks for Faster Approvals
Make Payments on Time
The credit score is one of the first factors lenders will look at when reviewing your loan application. Paying bills like utility and internet bills on time can help improve your credit score. On the other hand, missing these payments can result in defaults being listed under your credit report.
For example, if you have overdue payments of 60 days, then a default might be marked under your profile. Similarly, if you already have more than 14 days of outstanding repayments, a default might be recorded.
Defaults cannot be removed from your credit file for around five years. This will not give any lender confidence that you will repay your future loans. So, make sure you pay your bills on time and opt for auto-debit payments where possible.
Build Your Employment History
A regular source of income is one of the prerequisites that you need to meet before you even apply for a loan. If you have been jumping from one job to another frequently, it tells the lender you cannot keep a stable job and thus might miss payments in the future.
Most lenders may ask you to furnish payslips for the past 3 to 6 months as proof of employment and income. So, try to hold on to your job for a minimum of 6 months before moving on. Ideally, it is advisable to stick to one job and company for at least two years, as this also reflects well on your resume.
Pay off Existing Debt
If you have existing debt, first get it under control before applying for new loans. Having multiple repayment commitments tells the lender you might be in a financial crunch, meaning you might have difficulties repaying their loan.
Make a sincere attempt to clear all debts and loans early, as this reflects well on your credit profile. You can also consider debt consolidation loans. Instead of handling multiple repayments, consolidate them under one loan with a lower interest rate. Applying for a new loan when you cannot control your debt is not a wise option.
Avoid Multiple Hard Enquiries
Whenever you apply for different types of loans or a credit line, the lender will check your credit history. For example, if you apply for an Alex – personal loan, the digital bank will do a credit check to understand your risk profile.
A hard enquiry is when a third party requests a credit check on your profile. All your loan and credit applications are hard enquiries and will stay on your credit file for five years. Multiple enquiries can result in your application being rejected, as it indicates to prospective lenders that you have tried to obtain loans before and failed.
So, make sure you apply for a loan only if you are eligible and ready for it.
Start Tracking Your Expenses
The lender might ask for your expense and savings information along with income proof. The lender might see you as a liability if you live from paycheck to paycheck with non-existent savings.
Creating a budget, tracking your expenses and saving money every month would help you secure a loan faster. It would also be a good habit to develop to manage your finances better in the future.
Check Your Credit Report for Inaccuracies
Mistakes can happen; it is best to check your credit report in detail to avoid confusion. Common errors made by credit providers are incorrectly listing overdue payments or debts, recording a default when you are in dispute over overdue debt, or identity theft issues.
You can cross-check the report and bank statements to verify the accuracy of the credit report.
Seek Professional Help to Improve Credit Score
Navigating through financial documents and processes can get overwhelming for some. In such cases, do not hesitate to get professional financial help.
You can meet experts or consultants and discuss your situation and requirements with them. They will assess your current finances and recommend ways to handle expenses, improve savings and help raise your credit score.
Sort Financial Documents and Keep them Ready
Do your research on the lender, know what finance documents they require. For example, some of the standard documents you should have ready are:
- Payslips
- Bank statements
- Sources of income
- Tax returns if self-employed
- Loan and credit card statements, if any
Sometimes lenders consider credit scores from a particular credit agency only. So, for example, when applying for an Alex – personal loan, the credit rating will be checked from a particular agency.
You can find this information online, so be sure to check in advance and have all required documents ready on hand.
Stick to One Lender When Applying for a Personal Loan
As mentioned above, when you submit loan applications to multiple lenders, the data gets recorded in your credit file. Therefore, it is recommended you explore personal loans offered, compare them and apply to one lender.
Choose the Digital Way
Filling up forms and uploading documents online can be the fastest way of submitting a loan application. The digital medium eliminates the need of taking printouts, filling physical forms and visiting the branch frequently.
Lenders try to review applications sooner and, if approved, release funds without any delay. So if all your documents are in place, you can get your personal loan approved as early as possible.
Today, the personal loan application, review, and approval process has been revamped to suit customer needs. You can help banks speed up the process by ensuring all your personal and financial information is up-to-date.
