Whether or not you qualify for a personal loan and what interest rate you will be charged if approved for the loan depends on your credit.
That’s why checking your credit score is the first step you should take when applying for a personal loan. You can pay one of the major bureaus to see one of your credit scores, or you can use a free tool like the Credit Report Card, which updates your credit scores every month.
[Offer: If your credit score is low, it may be due to credit errors. Lexington Law helps you dispute these errors. Learn more about them here or call them at (800) 594-7441 for a free consultation.]
And if you haven’t checked your credit reports recently, you can request free copies of your credit reports from the three major credit bureaus. Review the content of your reports carefully and correct errors before shopping for a loan.
Research Before You Apply
Every time you apply for a personal loan triggers an inquiry into your credit and this nudges down your credit score a little bit. So be selective about the loans that you apply for. Ask lenders in advance about the minimum credit score that they require for personal loans. Some lenders will even list this information on their websites. Only apply for loans with credit standards that you meet.
A good place to begin your search for a personal loan is with your local bank or credit union. Be sure to research the credit criteria required for personal loans before you apply. Check your bank or credit union’s website, or call customer service. You may even wish to make an appointment with a loan officer.
Some online lenders are options as well. You can find loans on credit.com anytime.
What’s in a Loan Application?
In addition to checking your credit score, a potential lender will want to ascertain your annual income as well as your debt-to-income ratio.
Other questions you are likely to find on a loan application include: your monthly housing payment, whether you rent or own your primary residence, your employer and the years worked at your employer.
Being prepared with this information will speed up the process of applying for a personal loan.