Tips and Advice

Increase Your Chances of Getting Approved for a Personal Loan

If you've been denied a loan recently or your credit isn't good, you may be afraid to apply again. Learn the steps for getting approved for a personal loan.
A man sits inside of his truck while looking at his computer tablet to apply for a personal loan.
Written by:
Shannon Lee
Edited by:
Kristin Marino verified

If you’ve been told no to a personal loan in the past, you might be a little skittish about applying again. If you’ve never applied but you know your credit doesn’t look all that great, you might wonder what the point is in even trying to apply – you might be absolutely sure you’d get denied. Fortunately, there are a few surefire ways to increase your chances of getting approved for a personal loan.

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1. Know and Understand Your Credit Score

Knowing your credit score is important. This is a baseline number that lenders will use to help determine your creditworthiness. But it’s not enough to know what the number is – you should also know what goes into determining that number.

Payment history matters a great deal; not only how long you have been making payments, but also that they have been on time and in full. Credit utilization ratio also matters: This refers to the amount of credit you use versus the amount of credit you have. Your payment history and credit utilization ratio make up about 65% of your overall credit score.

2. Pay Down Your Debt

The less debt you have, the more likely you will be to qualify for a personal loan. It can be a bit of a catch-22, however, if you need the personal loan to consolidate those high-interest credit card bills that you’re having trouble paying in the first place.

The goal is to pay down what you can, as much as you can. That might mean taking some money out of savings (if you can), launching a side hustle, or applying any gifts or extra funds to the outstanding balances.

3. Pare Down Your Credit Cards

If you’re like most people, you have some credit cards on your credit report that you don’t use or that have very low purchasing limits.

Since your credit score takes into account the outstanding credit card debt you have as well as your total available credit limit, consider getting rid of certain cards.

Cancel those that are newer, have very small credit limits, and have not been used that often. The credit cards you want to keep include those that have a long history of on-time payments and higher credit limits.

4. Boost Your Income

Do what it takes to make that take-home pay higher.

An independent side hustle can bring in a good income, and though it might not be as consistent as taking on a second hourly job, over time the funds begin to add up.

In addition to the income numbers going up, doing this for many months can prove to the personal loan company that you’ve got the self-discipline to build up your income by thinking outside the box.

5. Look for Joint or Secured Loan Options

If your personal credit history and score are not enough to obtain a personal loan, look into those that offer joint loan options.

A joint signer, or even a co-signer, can combine the power of two credit scores and incomes to help you get that loan.

Another option is a secured personal loan, which will use some of your property – such as your home or vehicle – as collateral for the loan. This can also have the advantage of increasing the amount of a personal loan offer.

6. Don’t Request Too Much in Personal Loans

When you ask for a certain dollar amount in personal loans, make sure it’s what you really need.

Asking for too little has the obvious effect of not satisfying your financial needs, but asking for too much can raise questions about what you intend to do with the cash from that loan. For instance, if you have a total of $20,000 in credit card debt but you’re asking for a $40,000 loan, the personal loan company might not be keen on giving you the extra $20,000, and reject your application entirely.

7. Keep a Close Eye on Your Credit

As you are trying to improve your credit score to help you get that personal loan, take the time to check your credit history.

Every United States citizen is entitled to one free annual credit report. However, keep in mind that this credit report is available through three different agencies; so you can actually request one credit report from a different agency every four months. The credit reports are comprehensive, up-to-date (within the last month or two), and entirely free. Visit to request your credit reports.

Once you have those reports, take the time to look them over carefully. Do you see anything you don’t recognize? Are there any cards that need to be closed (as per the tip above)? Are there any mistakes listed? The credit report contains the information you need on how to request corrections.

The Bottom Line

Improving your financial life in the hopes of getting a personal loan can go a long way toward building the healthy habits you’ll need to get out of debt. When reaching for that personal loan goal, keep these points in mind:

  • Take the time to understand your credit score.
  • Repair your credit score by paying down debt with on-time payments.
  • Pull annual credit reports to check your progress.
  • Take on a part-time job or a side hustle to increase your income.
  • Shop around for a personal loan company.
  • Request only as much as you need to borrow.
  • Be patient! Fixing your finances is a marathon, not a sprint.

When you’re ready to apply for a personal loan, you can move forward confidently with the knowledge that you’ve done what you could to improve your odds of getting it, and you’ve learned healthier financial habits along the way.