There are plenty of reasons why you might consider applying for a bank loan. Buying a car, doing some renovations around the house and consolidating debt are just some of the scenarios in which a loan can come in handy. Banks aren’t, however, handing out money to every borrower that comes their way. It pays to do your research before you apply to ensure that you have the best chance possible of getting approved. (For more, see Different Needs, Different Loans.)

Requirements for a Bank Loan  

First things first: It helps to understand which factors are most important to lenders. Generally, when you apply for a loan, the bank is going to look at: 

  • Your personal credit score and credit history
  • Your income
  • How much debt you already have
  • Your assets
  • What you plan to use the loan for 

Your credit score is particularly important, because it determines in part how high an interest rate you’ll pay for the loan. The better your score, the lower the rate. A survey from Discover Personal Loans found that 60% of people who have used a personal loan graded themselves as having good or excellent credit health. So what constitutes a good credit score? If we’re talking about FICO scores – the scores most lenders use in making loan decisions – it’s anything above the 670 mark. (For more, see FICO 5 vs. FICO 8: What Are the Differences?

Being approved for a bank loan is no easy feat. Compared to online lenders, banks tend to be more stringent in terms of what’s needed to qualify. Before you begin shopping around for lenders or filling out applications, here are four tips for making yourself a more attractive loan candidate.

1. Check Your Credit

The last thing you want to happen when applying for a loan is to have the bank tell you your credit score is too low or there’s a major delinquency on your credit report. Taking time to review your report and score ahead of time ensures that there are no surprises. If you spot an error or an inaccuracy, reach out to the credit bureau reporting the information and initiate a dispute. If the credit bureau determines that your dispute is valid, the error would have to be corrected or removed, which could give your credit score a slight boost.

2. Pay Down Your Debt

Carrying a significant amount of debt could hurt your chances of qualifying for a loan. When lenders look at your debt level, they view it in the context of your debt-to-income ratio, which is how much of your income is going toward debt repayment each month. If you’re applying for a mortgage from a bank, the maximum debt-to-income ratio allowed is 43%. If you’re applying for a car or personal loan, you may have a bit more leeway, but in general the less of your income that’s going toward debt each month the better. 

3. Be Clear About the Amount

One potentially costly mistake you can make when applying for a personal loan is asking for a bigger loan than you need. If you need $8,000 to put a new roof on your home but are applying for a $15,000 loan, the bank may question what you’re going to do with the rest of the money. You could be denied on the grounds that lending you the money is too risky. (For more, see How to Apply for a Personal Loan.) Borrowing more than you need is problematic for another reason. The more you borrow, the more you have to repay, and the higher the interest total climbs. Besides that, getting a larger loan could result in a larger origination fee, which also adds to the overall cost of borrowing.

4. Get Organized

A little organization can go a long way toward helping you to get a bank loan. As you’re reviewing your financials, make sure you’re collecting key documents, such as your pay stubs, tax returns and bank account statements. Having those things on hand can speed the loan application process so there are no delays to getting approved.

The Bottom Line

Qualifying for a bank loan isn’t rocket science, but it does require a certain amount of prep work. After you’ve gotten your ducks in a row with regard to your credit, debt and financial documents, the next step is scouting out lenders. As you’re comparing banks, pay close attention to the rates, fees and terms they’re offering, so you can find the loan that best suits your situation.