Once you’ve determined the likely reason for your rejection, you’ll want to work on improving your financial situation before applying again. Below are some steps you can take to increase your chances of being approved. One of the best ways to ensure your qualification for a personal loan is to improve your credit score. The first step you’ll want to take is to check your credit report to verify it has no errors. It’s possible to obtain your credit report through various online resources and websites, but your best option is AnnualCreditReport.com where you can get a free weekly credit report from each of the three major credit bureaus all in one place. If you find any glaring errors in your credit report, you’ll want to dispute them with the appropriate bureau. Once you’ve checked your reports for errors, consider how you can build or improve your credit score. You may want to:Improve Your Credit Score
- Request a credit limit increase: Asking your credit card company for a limit increase and then not using the card will lower your credit utilization (a big factor in your credit score).
- Pay down your credit card debt: Paying off as much of your credit card debt as you can afford to pay will lower your credit utilization. Using a debt payoff method or talking with a financial advisor can help you prioritize and overcome credit card debt.
- Set up automatic payments: Having your payments automatically deducted from your bank account each month will help you avoid missing or making late payments.
Taking steps to repair your credit score can also help lower your DTI, increasing your odds of loan approval.
Ask Someone To Co-Sign
If your financial situation isn’t sufficient for loan approval, another option may be to ask someone to co-sign a loan with you. Getting a personal loan with a co-signer that has a strong credit score and a solid income can boost your application.
Your co-signer – ideally, a family member or close friend – will apply alongside you, and you’ll both be responsible for repayment of the loan. Because both your credit score and your co-signer’s score are on the line if you miss a payment, it’s important to make sure any potential co-signer understands the risks involved.
Please note that Rocket Loans℠ doesn’t currently offer the option to co-sign on loans.
Compare Lenders
Lending requirements aren’t the same across all lenders, so it’s often worth comparing multiple lenders to see if you may be loan eligible somewhere else.
Using a broker or lending comparison website might increase your chances of finding a lender that will approve you for a loan. With these services, your loan request goes to several lenders at the same time. This doesn’t damage your credit in any way, and it can provide you with more options.
If you’re still struggling to qualify through a traditional lender, consider working with your local credit union. Credit unions are often more flexible in their requirements and are willing to work with you to evaluate your financial situation.
Use Collateral To Secure The Loan
Most personal loans are unsecured, meaning they don’t require collateral and are approved primarily on your creditworthiness. If your credit score is lower than you need it to be, you could consider a secured loan.
The inclusion of collateral makes secured loans easier to get approved for, as it assures the lender they’ll get their money back one way or another – even if you default on the loan. After enough missed payments, your lender can take permanent possession of the collateral asset you’ve offered up.
Prequalify For A Personal Loan
Prequalifying through a lender can also be a beneficial strategy. Getting prequalified typically only requires a soft credit check and can provide you with a strong indicator of whether you’ll be approved. A prequalification also includes your tentative loan amount and interest rate. It’s important to note that although a positive response may come from your prequalification letter, this doesn’t guarantee you’ll be approved for a loan.
