Tackling your goals, whether they involve building your dream kitchen or paying off your credit cards once and for all, can be expensive. Taking out a personal loan can help.

Many consumers are turning to personal loans to help fund their goals. Personal loans are unsecured loans, which means they aren’t tied to an asset, like a car or home, which makes them riskier for lenders. Therefore, lenders need to evaluate your application to ensure you meet the qualifications to obtain a loan.

Think about it: If you don’t pay your mortgage, your bank can foreclose on your home to recoup the money you owe. Using an unsecured personal loan to pay for a dream vacation, for instance, doesn't have a tangible asset like a home associated with the loan, so your lender needs to have confidence in your ability to pay the money back. That’s why it’s important to be in a strong financial position when you’re applying for a loan.

Fortunately, there are things you could do to increase the chances you’ll get approved. Consider these 5 tips to help. 

Establish a Relationship With Your Potential Lender

In advance of applying for a personal loan at a financial institution, setting up a bank account there first may help.

When you establish a relationship with the institution, they have a record of your financial behavior, such as transactions on a bank account, which may be taken into consideration when analyzing your loan application. Demonstrating financial responsibility with your lender may help increase your chances of approval.

Care for Your Credit

Your credit score also plays a key role in your loan application. Credit bureaus grade your credit score from "poor" to "excellent." A great or excellent score typically means you pay your bills on time, you carry a reasonable amount of debt compared to your income level, which varies from person to person, and you’re not borrowing more than you can likely pay back. You don’t need perfect credit to get a personal loan, but a great score gives you more options, so you might be more likely to get approved and qualify for lower interest rates.

Request a copy of your credit report before you start applying for a personal loan. If you already have great credit, fantastic! You’re already on track for success. If you’re concerned, try these tips to increase your score before applying for a personal loan.

Borrow Only What  You Need

Personal loans can range from a few hundred to tens of thousands of dollars — and the bigger the loan, the harder it may be to qualify. So figure out how much you actually need to borrow, and what you can afford to repay, to increase the chances of getting approved for a personal loan. 

There are other benefits to only asking for what you need, too. You’ll likely need to pay interest on your personal loan, and the more you borrow, the more interest you may end up paying. In other words: borrowing more than you need costs you money, while borrowing just enough to fund your goals keeps your loan more budget-friendly. 

Get the Timing Right

The earlier you start preparing to apply for a personal loan, the better. Planning early gives you time to develop a relationship with your potential lender, potentially boosting your chances of success.

Planning ahead also gives you a chance to time your application around when you’ll look most financially attractive to lenders. If you believe you’re getting a raise in three months, for instance, consider holding off on your personal loan application until then. Your higher income means there may be a better chance that your personal loan will be approved.

The same idea goes for credit. If you believe your credit score is likely to improve soon, waiting until it goes up may give you a higher chance of getting approved or securing a lower rate.

Be Prepared and Ask Questions

If you’re speaking with a financial advisor or loan specialist, make sure you have any required financial information, like tax returns or pay stubs, on hand to assist with the application. 

As you go through the approval process, make sure you understand your interest rate and the terms of your loan, including what your monthly payments will be and how long it will take to pay the loan back.

Understanding the terms of your loan puts you at ease. It also puts you on track to stick to your loan repayment schedule — so you’ll have an even stronger credit history the next time you want to borrow. 

Once you’re ready to apply, reach out. Learn more about personal loan options at PNC Bank, and how we can help you work toward your financial goals.