Personal loans provide a flexible way to fund any type of expense, especially since loan amounts can be as low as $600 and as high as $100,000. The money can be used for everything from home renovations, to debt consolidation, funeral costs, wedding expenses, surprise medical bills and car repairs, among other big-ticket items.

If you’re considering applying for a personal loan but aren’t sure if you’ll get approved, there are a few things you can do to help your chances. Below, Select details everything you need to know.

1. Find A Lender That Meets Your Financial Needs

There are personal loan lenders that cater to a variety of circumstances and financial needs. For example, while you might not think you can qualify with a bad credit score, there are actually some lenders that consider applicants with low credit scores around 580 or 600.

Upstart even accepts applicants with an insufficient credit history — the company also considers those with credit scores of at least 600. At another lender, Happy Money, the minimum credit score required to apply for a personal loan is 550, so you do have some options to work with.

Keep in mind that while you may be approved for a personal loan with poor credit, you will still be subject to interest rates, typically on the higher end of the lender’s range.

If debt consolidation is your main reason for pursuing a personal loan, some lenders also offer personal loans explicitly for that purpose. Happy Money even goes so far as to allow borrowers to have the funds sent directly to creditors, which takes the hassle out of having to manually send the money yourself.

If you have poor credit, it’s best to avoid lenders that only consider applicants with good or excellent credit if you want to improve your chances of getting approved. It’s also a good idea to consider what you plan to use the loan for. Many lenders won’t allow you to use the funds for business or education expenses, for example, so don’t apply to those lenders if that is your intention.

2. Increase Your Credit Score

If you’re interested in applying with lenders that require higher credit scores to receive a personal loan, you’ll need to work on improving your credit score if it doesn’t already meet the minimum.

Paying your bills on time is the most important thing you can do to help raise your score — payment history makes up 35% of your FICO® Score, making it the most influential factor when determining someone’s creditworthiness.

You should also avoid applying for multiple lines of new credit within the same time frame, which can cause a serious hit to your credit score. Every time you apply for a new credit card or a new loan, the lender runs a hard inquiry into your credit report, which “dings” your credit and can temporarily lower your score. Make sure that if you do decide to go forward with an application that it’s absolutely necessary for your finances.

It’s always a smart idea to monitor your credit report for any inaccuracies, including any instances where lines of credit were taken out in your name that you weren’t aware of. This can be a very serious issue, especially since such errors and unknown lines of credit can drag your credit score down by contributing to your utilization rate and debt-to-income ratio.

3. Don’t Apply For More Than You Need

Many lenders will also consider how much money you’re applying for when they’re deciding whether or not to approve your application. While some lenders, such as SoFi and LightStream, offer loans as much as $100,000, it doesn’t mean you should necessarily apply for the maximum amount.

Before you submit your loan application, carefully consider exactly how much money you’ll need to borrow. For example, if you’re taking on a loan to consolidate your debt, calculate exactly how much debt you’ll be consolidating — otherwise, you’re just taking shots in the dark as to how much money you need to borrow.

Also remember that the more money you need to borrow, the higher your monthly payments will likely be and the more interest you’ll be charged. A high monthly payment gives you less wiggle room in your budget, and while you can sometimes opt for a longer repayment term, that also means you’ll be paying more in interest charges over the life of the loan.

4. Apply With A Co-Applicant

A co-applicant is someone who applies for the loan with you and is equally responsible for paying back the full amount. Co-applicants are often referred to as co-borrowers and can usually be added onto your personal loan application form.

Applying with a co-applicant who has a higher credit score than you can help you get approved for a lower interest rate, and even help you gain approval where you otherwise may not have been considered. This is because it’s common for lenders to analyze your credit history, debt-to-income ratio and other credentials during the process to determine the size of the loan, interest rate and the length of your loan term.

Having a co-applicant can be helpful if you don’t have enough of a credit history under your belt to get approved for a lower interest rate. It may also help if you need to take out a larger amount of money but don’t have a steady income.

Because co-applicants have a financial responsibility to repay what’s borrowed, it makes sense for it to be someone who will also benefit from the loan. Maybe you and your spouse are finally ready to tackle that home renovation you’ve been putting off for years; in this case, you might consider having your spouse be your co-applicant. Or maybe you need more funding to take the next step with your business; if you have a business partner, this person will also benefit from the money and therefore may be willing to be your co-applicant (as long as the lender allows you to use the loan for this particular purpose). These are just some considerations you need to keep in mind when it comes to tacking on a co-applicant for a personal loan.

The demand for personal loans has recorded an upswing, thanks to their quick approval, easy availability, zero collateral requirements, and no end-use restrictions. However, before sanctioning your borrowed amount, lenders meticulously review multiple factors such as your monthly income, CIBIL or credit score, repayment record, employment status, etc., to approve your personal loan application.

Here, if your application gets rejected, your credit score can take a hit. Hence, it’s crucial to increase your loan eligibility in advance to better your chances of loan approval.

Ensure A Healthy Credit Score

The most critical thing that strengthens your loan application is your credit score. The lender checks your credit report to ascertain your creditworthiness and establish you as a reliable borrower. A score of 750 or above is deemed healthy. So, before applying for the loan, you must check your CIBIL score to avoid any bumps in your borrowing journey.

Fill the Application Carefully

To ensure that you have the best application for personal loan, you need to make sure that your form is thorough and error-free. The lender requires you to provide various details such as your personal information, employment type, annual income, etc. Make sure to submit your current and permanent address, email address, contact number, and other details accurately. A correct application form will also result in faster loan processing.

Check the Eligibility

Before taking a loan, you must check the personal loan eligibilitycriteria set by the lender. Since different lenders have varying criteria and loan terms, compare the offers and choose the one that best suits your needs. Contact your lender or check out their website to know about the various requirements you must fulfil in advance.

Get Your Documents In Order

Proper documentation is your key to a hassle-free loan process. The documents you submit should be as per the details you provided in the application form. Lenders usually ask for your identity proof, address proof, employment certificate, income proof, and other credentials. So, you must keep the documents ready well in advance to ensure quick approval.

Get the Right Loan Amount

While a personal loan is a convenient tool to ease your financial worries, it’s still a debt burden. You might be tempted to opt for a higher sum, but you must chalk out a budget, estimate your future expenses, and get an amount you can comfortably repay. This will also increase your chances of getting approved for the loan.

Before sanctioning the loan, the lender will assess your repayment capabilities. And if you request more amount than you need, the lender might perceive you as a risky borrower. Using a personal loan EMI calculator can help you decide on an affordable EMI and ascertain a comfortable loan amount.

Over to You

Now financial freedom is all yours with Tata Capital! You can apply for multi-purpose personal finance at competitive personal loan interest rates for a convenient tenure of up to 6 years. Get quick finance with minimal documentation and flexible EMI payment options.

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By definition, a personal loan is a money that you can borrow for a variety of purposes. However, one question that many borrowers have is this: When can you avail a personal loan? You can avail a loan for a number of reasons. The funds from a personal loan can be used to travel, medical emergencies, education, planning a wedding, etc.

If you are planning to avail an unsecured loan, there are a few personal loan tips that you need to follow. These personal loan tips and tricks can help you get the funds that you need without worrying about being rejected by the lender.

There are many personal loan benefits. However, one of the biggest advantages of a personal loan is that it does not require any collateral. Hence, a personal loan is also known as an unsecured loan.

1. Proper Research Pre applying for Loans

Once you decide to avail a loan, you will come across information that may sound beneficial to you. This may come from not-so-well-known financial blogs or websites. However, it is important to read the fine print before you apply and get the funds. Hence, before availing a personal loan, it is important to do your due diligence so you are well aware of the process, charges, etc.

Instead of being caught unawares, conduct ample research about the financial institution you want to avail the personal loan from. Compare the terms and conditions of the top lenders before deciding on a lender. Research is one of the most important personal loan tips that all borrowers should follow.

2. Evaluate the need for a loan

Applying for a loan is easy. However, before you do so, ask yourself why you need to avail a personal loan. Create a checklist to evaluate your reasons. If you are truly short of funds and are hesitant to use your savings, a personal loan can be what you are looking for.

3. Check credit score

A really important tip to get a personal loan is to have a good credit score. A credit or CIBIL score is a three-digit number assigned to you after evaluating your financial history. A credit score is considered to be proof of an individual’s creditworthiness. Before you send in your personal loan application, check your credit score to get a fair idea on whether your application will be approved or not. An important point to keep in mind while checking your credit score is to understand  that a credit score reflects how much of a loan and of what amount has an individual taken from a particular financial institution. In the case that a potential borrower has not taken any loan from the particular institution and it still reflects in his/or her credit score, the potential borrower needs to report this to the particular institution.

A score of 750 and above is considered to be a good CIBIL score. If you are a first-time borrower, ensure that your credit report mentions NA (Not Applicable) or NH (No History) so that your application does not end up in the reject pile.

4. Eligibility

An important Personal loan tip is to meet all the eligibility criteria mentioned by the lender. Eligibility criteria include the age group, employment status, steady income, and availability of the required documents.

5. Check the interest rate

The interest rate is an amount that is charged by the lender while availing a personal loan. This interest rate, which is calculated in percentage, varies from lender to lender. Before availing a personal loan, check the rate of interest as provided by various lenders.

Find a suitable lender that provides you with an affordable interest rate that will fit your repayment plan. For instance, Finnable disburses personal loans with an interest rate ranging between 16% to 26%. A vital personal loan tip and trick to remember is that with a good CIBIL Score, you can negotiate with your lender to lower your interest rate.

Do keep in mind, Finnable charges interest on a reducing balance method as compared to most lenders who charge a flat rate of interest. Interest charged on reducing balance method basically means that the interest payable on each installment = Outstanding loan amount x interest rate applicable for each installment. This means that as the borrower pays each installment and the principal amount decreases, this also leads to which in turn reflects on the effective interest rate and reduces the monthly outgo or EMI as compared to most lenders.

6. Avoid multiple loans

Another important personal loan tip is to avoid having too many loans. Though loans help you during an emergency, too many loans give the lender the impression that you are unable to clear your old dues and cannot be considered as a trustworthy borrower.

7. Decide the tenure

The tenure is the time frame through which you repay your loan. Choose a repayment tenure in such a manner that it does not add any excessive financial burden on your budget. You can use a personal loan EMI calculator and use various permutations and combinations to find the tenure that is suitable for you.

8. Enquire on any additional charges

Almost every financial lender charges processing fees, documentation fees as well as various sundry charges while disbursing a personal loan. Some lenders are also known to collect pre-payment charges if a borrower wishes to close his loan before the stipulated time. A personal loan tip to keep in mind is to get a clear idea about the additional charges that the lender may levy upon you. It is also imperative to read the fine print before signing on the dotted line.

9. Repayment affordability

Once you avail a loan, you will need to repay the lender. This repayment is done in the form of monthly payments known as EMI. You can use a personal loan EMI calculator to find out how much that amount will be. Once you know the amount, ensure that you check your monthly as well as yearly financial budget to understand if you can repay the loan on time. If not, it may not be a wise decision to avail a loan at that point in time.