Are There Loans Where Everyone Is Approved?

Len Burgess[1]

Len Burgess

Money Savings Advice Loans where everyone is approved

Lenders need to be cautious. There are no loans where everyone is approved regardless of their financial situation. Luckily, there are many ways to increase your chances of getting a loan.

There are no loans where everyone is approved. Lenders will need proof that you can afford repayments before agreeing to lend you money. Loans with higher interest rates also have higher approval rates and might be the best option.

Lenders need to know that they have a chance of getting their money back. They’re not charities, so they want to know that they’ll make a profit from their lending. Lenders accept risks. They know that some borrowers will never pay back what they owe.

They charge interest and fees to cover these losses as well as bringing in a profit. A debtor that pays back everything they owe will help to subsidize someone that doesn’t.

Lenders also have many ways to claim money back over time. As a result, many lenders have ways to take on some risk.

Taking risks can pay off, but lenders are still cautious and won’t lend to absolutely anyone. If they did, there’s a very good chance that they’d pay out more than they got back. When there are no loans where everyone is approved, read on to find out how can you increase your own chance of approval.

Continue reading to get all the nitty-gritty details about loans where everyone is approved.

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How Lending Decisions Are Made

Lenders want to evaluate the level of risk for every loan application. If you have a high credit rating and a good income, they have a good chance of getting money back. If your credit rating’s poor and you’re earning very little, you are a much bigger risk.

Lenders are playing a constant balancing act. If they’re taking a risk, they’ll balance this by charging higher interest rates. A loan for someone that’s good at managing their money will be cheaper than a loan for someone with bad credit history. Lenders hope that by charging more, they’re taking a risk that pays off.

Increasing Your Chances of Approval

So many different things go into a lender’s decision. It’s impossible to know exactly how each lender decides who to lend to. But, as a customer, there are things you can do to boost your chances of approval.

Your best action is to spend some time improving your credit rating. Most people worry about their loan application because they’ve got a poor credit score. You can improve your credit score by making sure that you’re meeting your financial obligations. Pay bills on time and make at least the minimum payments on your credit cards. As you show that you can manage your money, your credit score will slowly improve.

You can also increase your chance of approval by finding a way to back your loan. This gives a lender a second chance to get their money back. You can back your loan with an object (like your car), or with a guarantor who’ll take responsibility if you can’t make your loan repayments.

According to research conducted by YouGov and analysed by Experian, one of the leading credit agencies:

  • 49% of UK adults have never checked their credit score
  • In young adults (18-24 years old), that figure rises to 72%
  • Of those who have checked their credit score, 20% haven’t done so in three years or more

By checking your credit score, you’ll understand what’s likely to happen when you apply, and you’ll know if you need to take action to improve it to help you get approved for loans and other forms of credit.

The Importance of a Regular Income

Lenders are very unlikely to approve your application if you don’t have a regular income. You’ll need to show that you’ve got a way to make your monthly repayments.

Some lenders will only approve people in stable employment. Others, however, will accept other income like your government benefits. You may need to provide your benefits statements as proof of income for a loan.

Finding Approved Lenders

If a lender advertises loans where everyone is approved, you should be wary of their statement. Either they’re not telling the truth, or there’s a good chance that they’re not a reputable lender. Loan sharks might be happy to lend to anyone, then use force to get their money back. Reputable lenders will not guarantee that they can lend to absolutely anyone. If an offer seems too good to be true, it’s very likely that it is.

Some lenders can offer a high approval rate, but not guaranteed loan approval. You can find reputable lenders on the Financial Services Register.

Always borrow money from approved and registered lenders. These will be regulated by the authorities, to make sure that they’re fair and responsible.

Loans With High Approval Rates

Loans with high approval rates aren’t the same as loans where everyone is approved. Some people are very unlikely to be approved for a loan.

If you have very bad credit and low or no income, there’s a very good chance that you won’t find a loan you’ll be approved for. If that’s the case, look for other ways to borrow or wait a while whilst improving your credit score.

You can use loan comparison websites to check approval chances in advance. These can run a soft search that won’t damage your credit file. You’ll be shown a list of loans that you might be approved for, so you can choose the loan that suits you best. At this stage, approval still won’t be guaranteed.

The Impact of Searches on Credit Files

Once you’ve provided all the information that a lender is asking for, they’ll likely run a hard search that lets them see more of your credit file. Then, they can make a final decision using this detailed information.

Hard searches can damage your chances of approval in future. These leave marks on your file that other lenders can see. If you’re worried about your chances of approval, try to avoid these hard searches until you have no other option.

Every hard search makes your credit file worse. If you apply for several loans in a short space of time, you’re showing lenders that you’re struggling for money and could be quite desperate for a loan. Each check reduces your chances of approval for future applications.

It takes a few months for your credit file to recover and for marks to be removed. If you haven’t been approved for a loan, take a break before trying again.

Don't take big risks when applying for loans. If you’re unlikely to be approved for a loan, it’s better to accept that and look elsewhere than to take a chance and apply. Be realistic about your chance of approval and the types of loans you’re likely to get.

Alternatives to Loans Where Everyone Is Approved

If you really need money but can’t get a loan, you’ll have to look elsewhere for a solution. Often this is a blessing in disguise, stopping you from accessing more credit and getting into even deeper debt.

Consider contacting a debt solution company, for help managing the debt you have already. You might also see if you can find a guarantor or ask for money directly from the family.

Lenders have an obligation to make responsible decisions. They shouldn’t lend money unless they’ve checked that you’re able to pay that money back. A reputable lender won’t approve an application that will send you into a debt spiral.

Sometimes, it can feel like you’ve got no options when you’re really struggling financially. Those that need loans with high acceptance rates are usually in very tough positions.

It can help to know your alternatives to loans where everyone is approved.

How Can Money Savings Advice Help You With Getting a Loan?

Here at Money Savings Advice, we have partnered with some of the UK’s leading loan broker companies. They have already helped thousands of people get the best loan that suits their needs, and they can do the same for you.

Choosing an independent loan broker means they won’t proceed with an application unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these loan brokers who can help you get a loan, then click on the below and answer the very simple questions.

 

Money Savings Advice Author Len Burgess

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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