Personal loans have become the fastest growing consumer debt category. As of July 2018, outstanding personal loan balances reached $120 billion.
But that doesn’t mean that everyone who wants a loan can get one easily.
Read on to learn how to get approved for a personal loan.
The first thing to do to qualify for a loan is to get pre-approved. This is when a lender will run a soft credit check on you to see if they’d be able to approve you for a loan.
This soft check doesn’t hurt your credit score. And it gives you a good sense of what you can get from various lenders.
It’s a good idea to pre-qualify from a few different lenders. That way you can compare the interest rates, the terms of the loan and the fine print and choose the deal that’s best for you.
Yet, if you want to get a loan without the lender running a credit check, personal loans without credit checks do exist.
Have a Stable Source of Income
Lenders want to know that you can afford to pay back the loan. They will need to verify your income and employment history if you want to get an unsecured loan.
A stable job shows lenders that you are reliable. Unstable employment with various gaps along the way will hurt your chances of getting no collateral loans.
Shop Around for the Right Lender
Each lender sets its own rules about income, credit score and so on that they use to decide whether or not to approve someone for a loan.
If you already have a relationship with a bank or credit union, start there. They are more likely willing to work with you because they know you. You’re more likely to get a better rate, too.
Yet, you should still shop around to make sure you are getting the right loan. Ideally, you want to compare at least three lenders.
Submit a Joint Application with a Cosigner
If you have struggled in the past with getting approved for loans, you may want to consider getting a cosigner with good credit to help you out.
Having a cosigner on your loan application greatly increases your chances of getting approved. But only if that cosigner has a decent credit score.
And, once you are approved for this loan, your credit score starts to go up!
You could ask a family member or close friend to be your cosigner. Just remember, you and your cosigner will share the debt. So if you don’t pay, the financial burden lands on your cosigner.
Final Words on How to Get Approved for a Personal Loan
We hope this article has given you valuable advice on how to get approved for a personal loan that is unsecured.
If you are unable to get this kind of loan, there are other types of loans that you may qualify for. Check out this post about bad credit payday loans.