How to give yourself the best chance for a loan approval
We know applying for a loan can be stressful. In this piece we’ve brought together some key things to check before you apply for a loan. Of course, these are only a guide and following these tips won’t guarantee you’ll be approved, but they do provide a roadmap to accessing credit when it’s the right time for you to borrow.
Check your credit score before you apply:Did you know 7 out of 10 people apply for a loan, credit card, mortgage, without checking their credit score. Checking your credit score gives you a better understanding where you stand on the credit ladder. This will help you narrow down where you want to apply for a loan. If needed, you can search for companies that provide bad credit loans to increase your chances of being approved. Checking your score is also a great way to make sure your credit file is up to date and there are no errors which might affect your chances of being approved.
Check lender requirements: Most companies have their application criteria on their website. Mainly, these criteria include your age, income, UK residency status and so on. You can find Oakam’s eligibility requirements here. Make sure you are eligible to apply, and you have all the details you need to make a full application.
Check your outstanding debts: Before you apply for a loan make sure you have noted all your income and expenses – analysing your expenses and debts will allow you to make a fair decision on how much you need to borrow and help you steer clear of borrowing more than you require.
How much can you afford to repay: Analysing your finances give you an idea of how much you can afford to repay. If you are already having difficulties making ends meet, we advise against applying for a loan. Most loan companies run an affordability check and will decline an applicant if they are unable to afford the loan repayments.
How long do you want to borrow the money for: There are various types of loans available and when you are applying for a short-term loan, it is important to evaluate how long you want to borrow it for. This is because you will pay interest based on the term (length) of your loan. Understanding how long you want to borrow for means you can reduce the amount you pay in interest over the life of the loan and decide if you can afford the repayments.
Being prepared is always a good idea. By keeping these tips in mind, you can make sure you are not applying with the wrong lender or for a loan you are unable to afford. Knowing where and when to apply can also help protect your credit score, which can be damaged if you apply frequently and are regularly declined.
Remember, having a bad credit history is not the same as being in financial difficulty. If you think you are in financial difficulty or are finding it difficult to pay your bills on time you should seek an alternative solution. To get debt advice information, we advise seeking independent advice from an impartial service like Citizens Advice or a qualified Financial Advisor.
Andrew Tate and James Hopkirk of Kreston Reeves LLP were appointed joint administrators of Oakam Limited trading as “Loal” (the “Company”) on 24 February 2022. The affairs, business and property of the company are being managed by the Joint Administrators. The Joint Administrators act as an agent of the company and without personal liability. Further information is available on the Kreston Reeves website.