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Personal Loans: How to Improve Your Chances of Qualifying

Personal Loans: How to Improve Your Chances of Qualifying

Jenius Bank Team4/14/2023 • Updated 4/10/2024
Person holding mobile phone with a check mark indicating success.

Doing your homework and making a few changes may increase your chances of getting your loan approved.

This article is part two of a two-part series. Check out part one here.

Personal loans offer flexible funding for just about anything you could imagine. Some borrowers use them to pay for home renovations or large purchases. Others use them to consolidate debt or cover unexpected bills. And they do so for good reason.

Personal loans typically have fixed payments and predictable terms, making them easier to budget for than high-rate credit cards with fluctuating monthly payments. But every lender has unique requirements that they expect applicants to satisfy when applying for a personal loan.

Let’s take a look at how you could increase your chances of qualifying for a personal loan.

Key Takeaways

  • Your credit score is a key factor that lenders consider when getting a personal loan and receiving a competitive rate.

  • Improving your debt-to-income ratio, reducing the loan amount you’re requesting, or adding a co-signer could improve your chances of approval.

  • Taking the steps to improve your approval odds may also boost your overall financial well-being.

Review Each Lender’s Requirements Before Applying

Every lender is different, as are their personal loan requirements. Use this to your advantage, and review each lender’s requirements before you apply to help determine which lenders are the best fit with your financial situation.

Even if you meet the qualification criteria, you may choose to improve your financial situation before submitting your application. Doing so may help you get a better rate or a higher loan amount.

Boost Your Credit Score

Your credit score is an important factor in your application. The higher it is when you apply, the more likely you may be to qualify for a personal loan.

Look for ways to potentially improve your credit score before submitting your application. Consider:1

  • Reducing your current debt obligations, if possible.

  • Avoiding other new loans or lines of credit before submitting your personal loan application.

  • Reviewing your credit report and reporting any errors or discrepancies you find.

  • Asking your credit card issuer for a credit limit increase if your score is already high. If granted,

    your credit utilization may improve. Just remember this could cause a hard inquiry on your credit report and your score may dip for a short time.

These simple steps could help you increase your credit score over time. Get a free copy of your credit report at

Review Your Options

Many lenders allow you to review your potential personal loan terms without doing a hard credit inquiry. Aggregator sites allow you to review offers and rates from multiple lenders at once, helping you understand how much you may qualify for and what rate the loan could have. That said, you won’t know the loan details for sure until you apply and the lender does a hard credit inquiry.2

Reduce Your Debt-to-Income Ratio

Lenders often look at the amount of debt you currently have compared to your income. This is known as your debt-to-income ratio (DTI), and it plays a significant role in getting approved for a personal loan.

If you have a lot of debt relative to your income, that results in a higher ratio, and lenders may be less likely to approve your application. On the other hand, if you have minimal debt relative to your income, your ratio is lower, and lenders may feel more comfortable extending you credit. Experts recommend keeping your DTI below 35% whenever possible.3

Consider a Co-Signer

If you need a loan now and don’t have the time to boost your credit score, you may be able to add a co-signer to your personal loan application.

A co-signer is a trusted individual—often a close friend or family member—who effectively guarantees the loan if you fail to make payments. Lenders look at their financial information and credit score alongside your own when reviewing your application. If your co-signer has a good credit score and their finances are in good shape, lenders may feel more comfortable approving your application.

Though your co-signer assumes the responsibility of repaying the loan in full if you can’t, you’re still expected to make payments to the lender on time each month. You’re the primary borrower. Your co-signer is there to give lenders peace of mind.4

Ask for a Smaller Loan

Lenders want to make sure borrowers are able to fully repay their loans. That’s why it’s important to only request as much money as you could reasonably repay. Your income, current liabilities (debts, credit cards, etc.), and other factors all go into how much a lender may approve you for.

Instead of shooting for the moon, think about what you’re going to use the money for and request an amount that covers those expenses. Smaller loan amounts typically translate into smaller monthly payments, and lenders tend to have more confidence that you’re able to repay those amounts.

Report All of Your Income Sources

Having a higher income may make lenders more confident in your ability to repay a new loan. It also may correlate with a lower DTI.

Be sure to report all of your income on your application. If you have income beyond your paycheck, such as dividends from investments or income from a rental property, include these. This increases the total income on your application and may boost your approval odds.

Final Thoughts

Your credit score and overall financial situation play a major role in your personal loan application. If you’ve done your homework on eligibility, you should be ready to start looking for the right lender.

Shop around and compare your options, keeping rates and fees in mind. While some banks have fees for things like applications, originating the loan, or making late payments, some skip those fees entirely. (Psst, Jenius Bank doesn’t charge our customers these fees on our personal loans .)

Borrowing & CreditBanking 101