How can I improve my chances of the loan being approved?
There is no way to guarantee approval for a personal loan, but giving yourself the strongest chance at being approved starts with meeting the eligibility criteria set by the lender. To further your chances of being approved, keep the following in mind:
- Establish your borrowing capacity. What repayments can you afford? Lenders will use a variety of criteria to decide how much you are eligible to borrow, but you need to know how much you can afford to repay.
- Build a good banking history. Keep your account in good standing to build a positive relationship with your bank, even if you don’t plan on borrowing from them.
- Keep your credit rating in good status. Make sure you keep track of all your payments, from credit cards to utility bills, because any arrears, debts, or missed payments will affect your ability to access credit.
- Keep track of your saving goals. If you manage to contribute to your savings regularly, it shows lenders you are likely to manage ongoing loan repayments.
- Open a transaction account with the lender you’re applying with. If you’re applying with a bank that has transaction accounts and the personal loan isn’t time-sensitive, establishing a banking history with the lender can help get your application across the line. It can also speed up the application process.
- Reduce the limit of your credit card/s. Not using your entire credit card limit? Consider lowering it if you’re not planning to use it soon. You’ll need to list the total limits of your credit cards on your personal loan application and any credit limit will be seen as a potential debt by the lender.
- Pay off some of your credit card debt before applying. If you take a look at your loan application (before submitting it) and the lender asks what is owing on your credit cards, see if you can pay down the cards before sending in the application. They are able to check the limit of your card on your credit report but not the amount owing – this is up to you to tell them.
- Make sure you’re out of your 90-day probationary period before you apply. Lenders don’t want to take the chance of giving you a loan during your probationary period. They will not approve a loan if you haven’t been employed at least three months, no matter how secure you tell them the role is. If you have only been employed for six months, your employer may receive a call to confirm you’re out of your probation period.