When you need to borrow money in an emergency, you want to see that you’re approved as soon as possible. Anything that delays your approval—or rejects it outright—can throw your finances in a tailspin.
So, what can you do to boost your chances of getting approved for a cash advance, installment loan, or line of credit? While you can never absolutely guarantee approval, these three things can put the odds in your favor.
Understand How Your Credit Score Factors into Eligibility
Your credit score is a significant factor in borrowing money. Generally speaking, a high credit score is favorable for your approval—most financial institutions are willing to grant you funds when you can show off a high score.
Despite the pandemic, Experian, one of the major credit reporting agencies, reports the average US credit score increased in 2020. Every state saw a boost in their averages, but these increases weren’t equal.
Washington, DC experienced the biggest spike of 10 points, while Texas was middle of the road with 8 points. North Dakota, meanwhile, reported the smallest change of 3 points.
Not everyone has good credit, however. Can you still borrow when your score is below average? Yes, some financial institutions are willing to work with people with bad credit, although you may have to pay high rates and fees.
Consider Location — Even When Borrowing Online
Most personal loans originate online, so there’s a good chance you’ll be opening your laptop or mobile phone to borrow money. When you do, look at where your money is coming from. Your lender has to be accredited to lend money in your state before they can legally offer cash advances.
This may not always be apparent. The Internet makes it possible to access websites from all around the world, so you could feasibly get pretty far into the research stage of a lender only to realize they service the UK.
If you live in Texas, this is a frustrating problem. You’ll have to scrap your research and refocus on installment loans or lines of credit from a financial institution accredited in Texas. Simply making this switch will improve your chances. After all, you can at least apply to get an installment loan online in Texas, but you probably won’t get very far into your application with that lender from the UK.
Clean Up Your Finances
This final yet integral step is most helpful if you’re sporting a less-than-stellar credit score—although it may be hard to achieve if you need to borrow money urgently. Building credit history takes time.
But just because you can’t see results today doesn’t mean you shouldn’t act on it now. Figure out how you can pay bills on time and keep your credit card usage low. These are two of the biggest factors influencing your score.
Paying down other debt is another step in the right direction. While your debt load may not factor into your credit history, it may influence a lender’s decision if you have deep debt that surpasses your income.
Approval is never a guarantee, but you can improve your chances by following this advice. These tips will help you figure out whether you fit a financial institution’s eligibility requirements.
Danis Woods in Businessman, investment banker and stock exchange traders. On the same time he loves writing financial blogs to shed lights on different aspects that new and existing businessman are not aware of.