If you have been struggling with finances lately and are looking to apply for a loan, there is usually one overruling factor that determines whether or not your application is accepted: your credit score. If you have a good credit score rating, you may be able to benefit from better interest rates as well as having the option of applying for a larger loan (if this is suitable for you). If you have a poor credit rating, you may very well experience the opposite. In fact, your application may be declined completely, which could very well further impact on your credit score.
With this in mind, what can you do? TechRound takes a look at some of the best ways you can improve your chances of getting accepted for a loan and improve your credit score.
Look at credit builder prepaid cards
If you have very little credit history, or alternatively are looking to improve a bad credit score, credit builder cards can help. Whilst not always advertised, many banks offer credit builder cards and can be easily applied for and most do not require a credit check. With these cards, you load the card with a specified amount (which usually cannot be accessed until you have made all of the repayments) you then use this card as you would a debit or credit card and pay off the balance each month.
Close any unused accounts that you have
A factor that can determine whether or not a lender accepts your application for a loan is how much credit on file you have available. If you have many accounts open, it could arouse suspicion and you may end up being declined for credit. This is why it is important to obtain your credit report and see if there are any unused accounts (this may be store cards you no longer use, credit cards, direct debits or phone contracts) that are on file so that you can close them. It is recommended that you take this step prior to making an application for a loan. You can close the accounts by contacting your credit reference agency (such as Experian or CallCredit) or lender.
Sign up to the electoral register
An easy way to improve your chances of getting accepted for a loan is to be on the electoral register. After all, if lenders aren’t able to trace any proof of your identity or address, is it any wonder that your chance of being accepted is reduced? If you are unsure as to whether or not you are on the electoral register you can check online at the GOV.UK website. It is worth double checking, especially if you have lived in different properties over a number of years as they may hold incorrect information on you, as you need to register each time you change address. If you find that you aren’t on the electoral register it is also possible to submit an application through the GOV.UK website too. The process takes only five minutes, and it could be the difference between being approved for a loan or not.