When you use a marketplace lender, like sofi personal loans, you get lots of choices as they match borrowers to lenders that suit their needs. The “competitive rates and terms for users” are often only available to those with better credit.
If you need a loan for a large expense or an emergency, you want to feel confident that you’ve done everything possible to be approved for your loan. We have some steps for you to follow to get you in the best position for loan approval.
1. Select the Best Loan Type for You
Once you choose the type of loan you need, you’ll be able to determine what is required for a successful application. Unsecured personal loans will cover many areas, but your needs might be more specific.
You should be able to find information on the lender’s website that tells you what the product is and how they make their decisions. Some will rely heavily on your FICO score, whereas others will have an algorithm that takes into account other data.
2. Work on Improving Your Credit Score
Now that you know the criteria, the next step is to understand how you meet it. Every lender will look at your credit score, and any that don’t are too good to be true. We advise you to learn about your FICO score, so you know where you stand.
Your score is a snapshot; if you have poor credit, it doesn’t have to stay that way. There are ways to improve by changing your behavior. This includes listening to advice on how to improve your credit.
3. Choose a Lender That Suits Your Needs
Not all lenders have the same standards, so find the one that fits your situation. If you’re still improving your credit, you could look for lenders that will look at the bigger picture and not just your FICO score.
Once you have found two or three potential lenders, make inquiries up to the stage where they’ll perform a soft check. This should give you more information about the terms of your loan without affecting your credit score.
4. Don’t Borrow More Than You Can Pay Back
It can be tempting to go for a larger amount if it’s available. However, this will affect your credit score and the terms of the loan, which could make the monthly repayments challenging. Set a budget and stick to it.
5. Study the Terms and Conditions
Before you move through the application process, find out the terms and conditions of the loan and which documents you need to supply to help the lenders assess your situation. Make sure that you feel comfortable, can meet the terms, and have the documents required.
The majority of lenders will want to see documents that show you have enough income to repay the loan. That could come in the form of payslips from your employer or a bank statement. You may have had to supply proof of income if you rent your home.
Identifying suitable lenders and reviewing their criteria is an important first step to approval. After that, you can take steps to improve your credit score, reduce debt, and build up a reliable source of income to show a good track record.