3 steps to help you get approved for a personal loan

woman applying for a personal loan on her laptop

Loan approvals can seem like a scary thing. Especially when it feels like lenders use a monster-sized magnifying glass to look into every nook and cranny of your finances. 

But the truth is, when applying for a personal loan, these types of checks are nothing to be afraid of … as long as you’re prepared. 

So with this in mind, we’ve put together 3 ways of improving your chances of getting approved. Read on and find out! 

1. Clear debt and improve your credit score 

Before applying to borrow, turn your attention to the current debt you have and the health of your credit rating. 

Whether it’s credit card, car or personal loan, or home loan debt, it’s important that you prioritise what you already owe before considering taking out yet another form of credit. Make sure you are making all your regular repayments and aren’t splurging when it comes to spending. 

Similarly, your credit rating plays a huge role in getting approved for a personal loan, as well as locking in a lower interest rate. Many Aussie personal loan lenders now operate on a risk-based pricing system, whereby an applicant’s interest rate is determined by the health of their credit rating. This means, the better your credit rating the lower the rate you’ll be offered. 

Need to clear your multiple debts and improve your credit rating? A debt consolidation loan may be what you need! Check out these options below …

Compare debt consolidation loans - rates updated daily

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2. Don’t apply too early or too many times at once

As we said, the better your credit rating the more chances you have of being approved for a personal loan - and the same goes for your general finances. If you aren’t in a financial position to borrow money just yet, then don’t rush into it. Give yourself the time to get your financial health up to scratch: whether that includes paying off the debt you have or becoming a better saver, lenders have the ability to go through your credit history as well as your transaction and savings accounts. 

Also remember, it doesn’t look good to credit reporting agencies when you apply for multiple loans at once. Take the time to do your research, compare personal loan options and find the one that suits you best. By doing this, not only could you secure yourself a top deal you may also increase your chances of being approved and not damage your credit rating either. 

3. Keep it steady when it comes to your job 

Another thing personal loan lenders look for in applicants is their job security, as they want to evaluate how likely you are to be able to pay back your debt. Keeping the same job and avoiding jumping around is a good idea when it comes to being approved for a personal loan. 

When you apply for a personal loan, lenders will likely ask you for 3-6 months worth of payslips to prove you have regular income. So it’s a good idea to have a few months in your current role under your belt before applying for a loan. 

So, what might I need for a personal loan application? 

There are a few things you’ll need to have at the ready for when you apply for a personal loan. 

These include: 

  • Your desired borrowing amount 
  • Your desired loan term 
  • Your personal details (name, address, DOB etc) 
  • Forms of ID, usually multiple (driver’s licence, passport, medicare card etc.) 
  • Financial information (transaction history, credit history, information on other debts etc.) 
  • Payslips (usually 3 to 6 months worth) 
  • Details of assets and liabilities 

Most personal loan applications can be done online, however depending on the lender you may also be able to apply over the phone or face-to-face. 

Ready to start comparing personal loans? Jump over to our personal loan comparison table for a bunch of great options.

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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