Maximize Your Chances of Getting Approved!
Updated: Aug 10, 2020
GUIDE TO GETTING APPROVED
It isn't uncommon to finance the purchase of a home, car or other expensive item. However, lenders only provide financing to those who they believe are capable of repaying their loans in a timely manner. Let's take a look at some steps that you can take to maximize your odds of getting approved for a mortgage or other type of loan. Review Your Credit Report Generally speaking, you won't be approved for a loan unless your credit score is at least 620. In many cases, you won't the best loan terms unless your credit score is between 680 and 720. One of the easiest ways to improve your credit score is to make sure that there aren't any errors on your credit report. If you spot any errors, you can ask the creditor that reported the information to have it removed. You may also be able to contact a credit bureau directly to have inaccurate information removed. If you don't spot any errors, you can still work to improve your credit score by reducing debt balances or by getting current on any past due accounts.
Contact a Lender Directly Each time that you apply for a loan, you will see an inquiry on your credit report. Typically, inquiries will temporarily lower your credit score, and too many inquires on a credit report in a short period of time may be a red flag for lenders. Therefore, it may be in your best interest to talk with a bank or credit union directly before applying. Doing so can help you learn more about a specific financial institution's credit and other requirements for approving a loan application before you apply. For example, a bank can let you know how much money you would need to put down to obtain loan approval or whether you should consider adding a cosigner. A lender may also be able to estimate your interest rate and monthly payment during an initial conversation. This can make it easier for you to decide whether it's worth submitting an application or simply continuing your search for a financing partner that better meets your needs. Be Ready to Provide More Information When you apply for a loan, you'll be asked to provide basic personal information such as your employment status, monthly income and the amount of your monthly rent or mortgage payment. After a lender checks your credit, you may be asked to provide additional documentation that verifies your income or employment status. The faster that you provide pay stubs, tax returns or other data, the less time it will likely take for a bank or credit union to make a loan decision. In most cases, it only takes a few minutes to complete and submit a loan application. However, before this happens, be sure that you take time to clean up your credit profile and find a lender that offers reasonable terms. Doing so may make it easier to approved for a loan that fits in your budget.