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Whether you need money for home renovations, medical bills, or other personal expenses, a personal loan could be a helpful option. To qualify for a personal loan, you will generally need good to excellent credit, verifiable income, and a low debt-to-income ratio (DTI).
Cleaning up your credit and paying off any outstanding debt could help your personal loan application get approved.
If you’re ready to take out a personal loan, here are four tips to improve your personal loan application:
- Check your credit report
- Don’t ask for the highest loan amount you can get
- Consider applying with a co-signer
- Find the right lender
1. Check your credit report
Your credit score is one of the main factors that lenders consider when deciding whether or not to approve you for a personal loan. You will generally need good to excellent credit to qualify – a good credit score is generally considered to be 700 or above.
For this reason, it’s a good idea to check your credit report before applying to see what state your credit is in. You can use a site like AnnualCreditReport.com to review your credit reports for free. If you find any errors, be sure to dispute them with the appropriate credit bureau online, in writing, or over the phone to potentially boost your credit score.
Learn more: How to create credit quickly and efficiently
2. Don’t ask for the highest loan amount you can get
When you apply for a personal loan, the lender will measure the risk of lending to you. This includes determining whether you are reasonably able to afford an additional monthly payment on top of your current obligations.
If you try to borrow a large sum of money that would stretch your budget too much, lenders might consider you too much of a risk, which means they probably won’t approve your application.
Before applying for a personal loan, be sure to determine how much you can afford to pay each month for the loan. This can help you determine a loan amount that will fit comfortably into your budget, which will likely make approval easier.
You can use our personal loan calculator below to estimate your monthly payment and overall loan cost with different loan amounts.
Enter your loan information to calculate how much you could pay
ready, you will pay
monthly and a total of
interest over the term of your loan. You will pay a total of
over the term of the loan.
3. Consider applying with a co-signer
If you have less than perfect credit, applying to a creditworthy co-signer could help you get approved for a personal loan. Not all lenders allow co-signers on personal loans, but some do.
A co-signer can be anyone with good credit — such as a parent, other relative, or trusted friend — who is willing to share the responsibility for the loan. But before someone co-signs a loan for you, it’s important that you both understand the risks involved, such as:
- Responsibility for payment: If you don’t repay your loan, your co-signer will be on the hook.
- Credit damage: Missing payments on your loan will cause damage to your credit as well as that of your co-signer.
- Tight relationships : If you’re unable to manage your loan repayments and hurt your co-signer’s credit, you could end up straining your relationship with your co-signer.
Check: How to get a personal loan
4. Find the right lender
There are a wide variety of lenders that offer personal loans, including online lenders as well as traditional banks and credit unions.
Before applying, it’s important to shop around and compare your options with as many personal lenders as possible. This way, it will be easier for you to find an optimal loan for your situation with an advantageous interest rate.
If you’re ready to start looking for a personal loan, Credible can help: you can compare your pre-qualified rates from multiple lenders in two minutes. Note that this only requires light credit which will not affect your credit.