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Applications for personal loans can be daunting, sometimes there is so much to read and interpret. For this reason, many applicants make mistakes on their application. Unfortunately, filling out an application incorrectly can result in your loan being rejected, regardless of how minuscule the error is. To better your chances of approval, learn about the common mistakes made on personal loan applications and other ways you can increase your chances of approval.
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Common Mistakes Made on Personal Loan Applications
Loan applications can be complicated and dull, no wonder mistakes happen! To better prepare for your next loan application with a personal loan lender like Borrowell, it can help to be aware of common mistakes so that you can avoid making them. Below is a list of mistakes commonly made on applications for financing.
- Not Completing the Full Application. This point is pretty simple. Before you submit you should answer all of the questions and complete the entire application. If you fail to provide a crucial piece of information to the lender, your application may be rejected.
- Not Providing Your Full or Legal Name. Creditors use your full legal name to verify other information you’ve provided. For example, your full name as shown on the application should match the name on your bank account exactly. If your name doesn’t match the name linked to other information, the lender may not be able to verify your identity. Avoid using nicknames or other variations of your name on loan applications.
- Failing to Meet the Minimum Requirements. Lenders typically provide a list of requirements you need to qualify for a loan. Before applying, check the list to ensure that you meet the minimum requirements.
- Using False or Incorrect Information. Creditors want to verify the information you provided to ensure you’re legitimate before extending credit. If you provide false or incorrect information, they likely cannot verify your information resulting in rejection.
- “Incorrect” Bank Account. Creditors use your bank account information for the initial loan deposit and future loan payments. What you may not know is they use your account information to confirm your income as well. If you provide a bank account that is not associated with your pay cheque or income, the lender may conclude that you don’t have a steady income.
- Apply for Too Much Money. The amount you apply for should be reasonable for your financial circumstances and be enough to cover whatever you need the money for. Applying for too much money could communicate to the lender that you are high risk thereby leading to your application getting rejected.
How to Improve Your Chances of Getting Approved
Ensuring you fill out the loan application properly is one way of improving your chances of getting approved. Although, there are many other things you can do too. The following list is composed of ways you can better your chances of getting approved.
Your credit score is a major consideration for most lenders, particularly for personal loans. Before applying, look at your credit score and report. The first thing you should look for is errors, if you find one, reach out to the appropriate credit bureau to have the mistake corrected.
The higher your credit score is, the better. To boost your credit score, pay down existing debt and get on top of payments, you should be making payments on time and in full. Lastly, you can request a credit limit increase to boost your credit utilization ratio.
Another Source of Income
If you can, get a second source of income from a part-time job or side hustle. The higher your income is, the better. In addition, your debt to income ratio will benefit from a second source of income, particularly if you use your extra cash to pay down existing debts.
The Right Lender
Part of the loan application process is finding a lender that suits you best. Every individual has unique financial needs, your lender should fit those needs. You may have to spend some extra time researching lenders and financial products, but it will pay off in the long run.
Use a Cosigner
If your credit isn’t the best, you can use a cosigner to improve your chances of getting approved. The cosigner should have strong credit and high income because they are responsible for your debt if you default.
For more information about using a cosigner to get approved, click here.
A Word About Guaranteed Approval
Every now and then, a lender will guarantee approval. This means that you will be approved for the loan in question before the lender considers an application or follows a loan approval process. You may be thinking, guaranteed approval? Sign me up! Although, before you sign anything, think twice about the situation.
If something seems too good to be true, it probably is. This applies to loans with guaranteed approval. Lenders have procedures in place to determine if a candidate is worthy to ensure that they don’t take on too much lending risk. Lenders who claim that they don’t use these processes are likely fraudulent or scams because no lender can afford not to rely on risk assessments of their candidates. If a lender says they guarantee approval, it is advised that you find another lender.
Video: Everything You Need to Know About Loan Scams
When you’re applying for a loan, it is best that you do your part for the best odds of getting approved. This means filling out applications completely and correctly as well as doing what you can to better your financial position. After all, you don’t want to get rejected for a loan due to a small mistake that could’ve been avoided!
Check out this article for even more information about being rejected for a loan.
Personal Loans That Meet Your Needs
If you’re interested in applying for a personal loan to cover the cost of an unexpected expense or large purchase, Loans Canada can help match you with the right lender today!
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