Note From Kalen: I’ve written a lot about how to get out of debt.  That being said, you’re the one who makes your decisions, and your decisions may include a personal loan for whatever reason (debt consolidation, for example).  I always like to include multiple perspectives.  This post covers tips for getting approved for a loan if you choose to get one.  As with anytime you borrow money, be sure to do your research and make an informed decision.  Also, this post is directed towards UK readers, but it applies just as well to US readers.

Being rejected when you apply for a loan or other form of credit can be dispiriting experience. You may be asking yourself what you did wrong, what is suggesting that you are a credit risk or if there has been a mistake.

It’s worth remembering if you are in this situation that you are not automatically entitled to credit. Banks and other lenders only lend to people that they think represent a low risk on what is an investment on their part and are unlikely to accept applications for people they think are unlikely to repay the money they want to borrow. It’s a balancing act – they want to protect their money while, at the same time, increasing the profits they make from the interest charged on the loans that they do make.

There’s no getting around this – you may be upset about it but there’s probably a very good reason why you were rejected. While you may be able to repair your credit record over time, there are certain steps that you can take before you apply for a personal loan that will maximize your chances of being accepted.

So, pause and take stock before ploughing on and firing off a load of other applications that may well be rejected and will actually impair your credit rating even further. Think about any financial errors that you may have made in the past which might be flagging you as a potential risk when a lender looks at your credit record. Ask if you’ve actually got a sufficiently long record of borrowing and repayments in the first place and, crucially, are you sure that you are on the electoral roll (something that most lenders will look for before considering you any further)?

Remember that each application you make which is then rejected will have a damaging affect on your prospects for obtaining credit in the future. If you have made a lot of applications for credit over a short timeframe, then the banks and other financial organisations might think that you are in financial difficulty and trying to get hold of money to cover a shortfall in your income. They will almost certainly steer clear of you if you are in this position.

So, let’s look at the seven positive steps that you can take right now to increase your chances of being accepted when you make that personal loan application. None of them are guaranteed to bring you success but, if you follow them, you can be safe in the knowledge that you are putting yourself in the best possible position:

1. Ensure you’re registered to vote

Those who have moved house in the recent past might not have had a chance to get themselves onto the electoral roll. This will make the chances of being turned down for a personal loan significantly higher than those who are registered. Banks and other lenders view unregistered voters as higher risks because it suggests that they move house frequently and this is a tactic often used by people trying to escape from their debts. Call your local council or go to to make sure that you add your name to the electoral roll.

2. Cut your total debt

You can significantly improve your prospects of being accepted for a personal loan if you cut down on the amount you already owe. Lenders shy away from people with a lot of existing debt on the basis that their debt-to-credit ratios represent a risk. Avoid this by increasing your repayments, settling balances if you have the money to do so and by paying off your overdraft.

3. Get hold of your credit file from one of the three main credit reference agencies

You can do this for a small fee or by taking out a subscription that will give you unlimited access to your records. You can spot any mistakes on your record and assess whether you are actually likely to be accepted before making an application.

4. Close old accounts

Satisfying (settling) loan agreements and credit card accounts is a good way to boost your chances of being accepted for a new personal loan relatively quickly. If you can afford to settle an account then it may well be worth doing so before you put in an application for a new loan. But remember to wait a few weeks before applying after you’ve settled accounts because it takes up to a month for this to be shown on your credit record.

5. Make sure your contact information is up to date

When a lender has a query about your application, it will probably want to try to clear the matter up quickly. That means a telephone call or, at the very least, an email. This is why application forms ask you to include your home, office and mobile numbers. Ensure that you use up to date information on the form so that questions can be answered quickly and to speed up the entire loan process.

6. Don’t get caught out by small print

Make sure that you are eligible for the loan that you are applying for by reading the small print. Remember that the APR advertised only has to be offered to 51% of successful applicants – you might not fall into that category and could end up paying a higher interest rate than you had bargained on.

7. Borrow more

It may sound counterintuitive but there is plenty to suggest that banks and other lenders are more inclined to offer loans to people who apply for larger rather than smaller amounts. This is because a lender will make more interest over the longer-term with a larger loan than a smaller one.

Article provided by Mike James, an independent content writer working together with technology-led finance-broker Solution Loans, who were consulted over this post.