How to be accepted for a loan

Want to borrow money for home renovations, new car, or anything? Find out how to increase your chances of being accepted for a personal loan.

Personal loans like internet loans from are popular because they do not require a designated purpose. They could, in theory, be used for anything – although it is always wise to consider whether you really need to get yourself into debt before taking one out for something like a holiday. 

Personal loans are often considered easy to get, but you still need to pass an application process before taking one out as personal loan lenders need to ensure that you are an ideal borrower for them.

For this reason it is a good idea to know what you are getting into before you start the process of applying for a loan. Applications will differ from lender to lender, but there are several things that will be the same across every lender. Here are some things you need to consider and prepare before applying for a perusal loan.

Make sure your credit history and credit score are good

First of all, you need to consider your credit score and your credit history. Your score will be one of the primary factors a lender will consider when they evaluate your loan application. 

Credit scores can vary from 300 to 850, and they will be based on things such as how much outstanding debt you have, how long your credit history is, and the history of payments. 

Many will need you to have a minimum score of 600 to qualify for a loan, but some will take you on without a history. 

Make sure you earn enough

Lenders will often have income requirements on their borrowers to make sure that they have what they need in order to repay this loan. These requirements do vary from lender to lender. 

Some can be $45,000 per annum, some could be $20,000 per annum. Do not be shocked if your lender does not disclose this information to you, however. 

Evidence of income will often come in the form of pay stubs, bank statements, signed letters, and tax returns. 

Those of whom are self-employed can provide bank deposits, or tax returns.

Check your debt to income ratio

Another factor that will influence if you get the loan or not is your debt to income ratio. This will be shown as a percentage and will represent the amount of your monthly income which goes towards debt. 

A lender will use this to get an idea of your ability to make payments on current and new debt. 

A debt to income ratio below 36% is an ideal percentage, however, there are some lenders who will approve those who have a ratio up to 50% if they are a highly qualified applicant. 

Consider collateral on secured loans 

If you are applying for a secured personal loan then you will need to pledge valuable assets, aka, collateral, to the lender. 

With homes and vehicles, collateral is often in relation to the purpose of the loan. Yet, since personal loans are not strictly purposed for anything in particular, they can have collateral which is other assets, including investment accounts, cash accounts, collectibles, or real estate. 

Then if you were to fall back on your payments, or default, the lender is legally allowed to reprocess the collateral item in order to recuperate the remaining balance of the loan.

Check you can afford any fees

Although it is not a part of the qualification process for the loan, some lenders will need their borrowers to pay a personal loan origination fee in order to cover whatever costs there are of processing an application, running and closing credit checks and so on. 

Feels like such can be as small as 1% or as large as 8% of the total amount of the loan. 

It will also depend on factors such as your credit score and the amount of the loan though. Some lenders will collect the fees for origination at closing, others may include them as part of the amount of the loan, or even subtract them from the total loan given at closing. So do remember this. 

Get the right documents ready

Because of all these above factors, you do require certain documentation when you put in a loan application. The lender will ask for these, but it is best to have all of these ready, as to not hold up the process. 

These documents can include identity proof of residence, employment and more. Here is a general idea of what you will need: 

  • Loan application. 
  • Proof of identification. 
  • Income verification. 
  • Employer verification. 
  • Proof of accommodation or address

Note that you ideally want to have a credit score of 670, and have a consistent income with a DTI ratio of below 36%.