5 Tips for Getting Your Bank Loan Approved

5 Tips for Getting Your Bank Loan Approved
A bank loan is something we may all need at some point, for one reason or another. However, with today’s economic problems, it’s not as easy as it may seem to have one approved.
Banks need to be sure that when they give you the money, they’ll also be getting it back. No one would lend you money without having some kind of insurance – so to maximize your chances, here are some tips that you might want to consider.
1. Improve Your Credit Score
A good credit score is practically a mirror of how true you are to your word. Whenever you make a timely payment, regardless if it’s an electricity bill or another bank loan, the facts go on your credit history.
When the bank takes a look at that credit score, they will know that you are not likely to default on the loan – therefore increasing your credibility.
2. Add Some Collateral
Collateral means, once more, that you are bringing some insurance for the bank. This can be any kind of asset: a car, your house, or even your savings account. By adding collateral, you are practically giving your bank the right to repossess the asset in case of a default.
If you make your payments on time, this should not affect you in any way. If anything, it will only prove to the bank that you have all the reasons to stay true to your payments.
3. Have Some Stability
One of the most important factors for getting a bank loan is to create a sense of stability – in other words, have a stable income. If they see that you often change your job or have fluctuating income, they are less likely to approve you a loan.
On the other hand, if they see that you have had the same job for the past six months and that your income is stable, they will be more inclined to accept your application. Anything else that is considered a “risk factor” is generally rejected.
4. Don’t Make Multiple Applications
Many people make the mistake of applying to different banks for a loan in hopes of maximizing their chances; however, that may only backfire. Each loan application is registered – and if your lender sees this, they might think that you are “credit hungry.”
If you don’t want to give your lender the impression that you can’t fund your expenses, you should apply just to one loan at a time. If your application gets rejected, you may proceed to apply to another bank.
5. Know Your Limits
When you apply for a loan, make sure that you can actually afford to pay off that loan. A good tip would be to borrow no more than 30% of your income. For example, if your salary is $60,000 a year, your loan should not go over $20,000. Banks will only give you the loan if they know for sure you’ll be able to handle it.
Getting your loan approved is, most of the time, a battle in itself. However, if you can prove that you are trustworthy, there’s no reason why they shouldn’t approve your application.