Securing any type of loan requires making some advance preparation. In most cases, this means providing information that is requested by the lender and generally proving that you do represent a reasonable risk to that lender. While the requirements for different types of offline and online loans will vary, there are a few basic things you need to do in order to increase your chances of meeting lender criteria and having your loan application approved.
Proof of Identity
Most lenders of traditional and online loans will not loan money to individuals if those applicants cannot provide some sort of proof of their identity. This means you must have a valid government issued identification of some type. Even something as simple as a driver’s license will be sufficient.
Proof of Residence
Many lenders require that you be able to prove that you do in fact live where you say you live. This can often be verified by providing the lender with a copy of a recent utility bill or the contact information for a landlord. Having a verifiable residence is an indication of stability, something that lenders tend to desire when it comes to lending anyone money.
Proof of Income
Demonstrating that you have the ability to repay the loan is extremely important. To that end, providing verification of employment or documentation that confirms other streams of income will be part of the application process. Provide legal documents such as employment check stubs, child support payments, dividend payments or any other documentation that proves you have consistent income that can be used to repay your debt. Even short-term lending arrangements, such as payday and similar types of online loans, will require verification of income before the loans can be approved.
Credit Ratings and Scores
Lenders not only want to make sure you have enough money coming in to honor your debt, but that you are up to date on your current obligations. For this reason, lenders will often order credit reports from at least two of the major credit reporting agencies. A great deal of attention will be given not only to your credit score but also any positive and negative feedback that current and former creditors have submitted to the agencies. For this reason, it’s a good idea for the applicant to order copies of his or her reports ahead of time and go over them carefully. If any data on the reports is outdated or incorrect, steps should be taken to update the reports before applying for any loan.
With so many loan options today, it is sometimes confusing to know exactly how to prepare before submitting a loan application. Check with lenders in advance, since most will provide a breakdown of the information required as well as any supporting documentation. Taking the time to assemble the right data in advance means there are no delays in considering the merits of your application and receiving an answer. Assuming you do meet all the lender’s criteria, the application will be approved and the borrower can begin to use the proceeds from the loan for the intended purpose.