How to boost your chances of being accepted for a loan

If you’re considering borrowing money, you may be thinking about how you can improve your chances of getting accepted.

You’re more likely to be accepted for a personal loan if you can demonstrate good creditworthiness and affordability. This essentially means you should you have a good credit score and demonstratable history of managing money well, and you should be able to comfortably afford to make the new repayments alongside any existing debts.

There are a few other ways you can try to increase your chances of being accepted for a loan. In this guide, we’re covering seven extra tips.

1. Review your credit report

A lender or credit reference agency will base your credit score on information found on your credit file. It’s therefore important to check your credit report to make sure it’s an accurate reflection of your financial history.

You can get a free copy of your credit report from each of the three main credit reference agencies’ partner websites: MoneySavingExpert’s Credit Club (Experian), ClearScore (Equifax) and Credit Karma (TransUnion). Ensure your credit report is up to date and free from any errors or inaccuracies a month or so before applying for credit.

You may be concerned your credit score isn’t as good as it could be. But don’t worry – your credit score isn’t set in stone and can improve over time. Why not set aside a few minutes to read our guide on improving your credit score?

2. Calculate your affordability

You should only ever borrow money that you can realistically afford to repay, so look closely at your finances to decide what loan amount to apply for.

This will not only ensure you don’t end up with unmanageable debt, but you’re also more likely to be accepted for a loan if you apply for the most suitable amount of money. That’s because lenders will only accept an application if they believe the additional borrowing is affordable for you.

Draft up a budget before applying, analysing your income and expenditure to find out how much you could comfortably afford to repay each month.

You’ll pay a higher monthly amount for a larger loan (compared to borrowing a smaller amount over the same loan term) and you’ll also likely be charged more interest in total so make sure you factor that into your calculations. You can use our loan calculator to give you an idea of how much a loan could cost both monthly and in total.

Remember that the loan term you choose can have an impact, too. If you are trying to bring your monthly repayments down, you may wish to choose a longer loan term (though you’ll pay more interest in total as you’ll be borrowing for longer).

3. Fill out your loan application carefully

Be as accurate as possible when completing your application form.

Rough guestimates or incorrect / inconsistent answers will likely result in your application being declined or referred if we can’t verify the right information. While a referred application could result in an accept, it could slow down the application process – depending on how quickly you share the required information.

4. Choose the right lender

Make sure you meet a lender’s eligibility criteria before applying. Each lender will offer different loan products with specific application criteria – so it’s essential you understand what a lender’s looking for before applying. If you don’t meet the basic requirements (which should be listed on a lender’s website) you will be declined automatically.

Do keep in mind that meeting a lender’s eligibility criteria does not mean your application will always be accepted – most lenders have a complex assessment process that helps them to make a responsible lending decision based on your personal and financial circumstances.

Try to keep new credit applications to a minimum too. While it’s tempting to apply to lots of different lenders to try and secure the best rate, this can damage your credit score. A hard credit check will be recorded on your credit file with each full application for a loan or credit card – and lots of these hard searches in quick succession can be a red flag to lenders. It’s therefore worth doing your research thoroughly and only applying to lenders you feel are the right fit for you.

5. Keep things consistent

It’s probably not likely you’ll stay in the same house and keep the same job forever but, in the months leading up to applying for a loan, you may want to consider sitting tight. Lenders value consistency and won’t want to see significant changes in circumstances or income right before your application comes in.

If you have a steady, consistent stream of income you’re more likely to be able to demonstrate you can afford to pay back your loan. And that’s something lenders like to see.

6. Be mindful of your debt-to-income ratio and credit utilisation

Your debt-to-income ratio is what percentage of your monthly income is going towards debt repayments and your credit utilisation is what percentage of your total available credit you’ve used.

While your credit utilisation can impact your credit score, debt-to-income ratio will factor into a lender’s decision-making process too. As we mentioned earlier, lenders need to know you’ll be able to afford the new loan repayments. So, if your debt-to-income ratio is too high this could suggest a new loan will be unaffordable for you due to all your other financial commitments.

Try to keep both your credit utilisation and debt-to-income ratio low. As a rough guide it’s recommended to try and keep your credit utilisation at 30% of less.

7. And most importantly… make all your repayments on time

We say this a lot across our blogs, but that’s because it’s so important. One of the best ways to improve your credit score – and to boost your chances of obtaining credit in the future – is to pay off your existing debt on time each month.

Lenders will look at your credit history to determine what kind of customer you might be. You’re more likely to be viewed as a ‘safe bet’ if you’ve previously always paid off your debt on time. It makes it more likely you’ll behave in the same way in the future.

It doesn’t matter if it’s a mobile phone contract, utility bill, credit card payment or mortgage repayment – make sure you’re paying it off on time to demonstrate good money management.

Want to find out more about the application process?

Our guide on how a lender makes a decision on loan applications could be just what you’re looking for. And, for even more information, our ultimate personal loans guide is packed full of everything you need to know.

If you do decide getting a personal loan is the right decision for you, borrow up to £35,000 with rates starting from just 7.4% APR Representative (£7,500-£25,000).

Apply for a loan now