9 steps to help get your bank loan approved and keep you on track to repaying it

• If you want to apply for a bank loan, the first thing you'll need to do is check your credit.
• Generally, to get a bank loan you'll need to be an existing customer with good credit.
• Then, you'll need to assemble your paperwork and get clear on the terms of the loan.
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Whether it's to consolidate debt, finance a business, or make home improvements, a personal loan can be a way to pay for what you need and build credit at the same time.

To get a personal loan from a bank, you'll generally need to provide a credit score and history, proof of income, debt-to-income ratio, and collateral for a secured loan, says Gabe Krajicek, CEO of Kasasa, a fintech company that provides financial products and services to community banks.

"Bank of America, like some other megabanks, does not offer personal loans," Krajicek says. "Others, like Citibank and Wells Fargo, may offer personal loans only to account holders and have minimum credit and income requirements to qualify."

Banks face more regulations than online lenders, so they have the strictest lending standards, says Priyanka Prakash, lending and credit expert at Fundera. Online lenders are generally more flexible.

You can use a personal loan marketplace like LendingTree or Credible to request rates from multiple lenders at a time. Here's how to get a bank loan.

1. Check your credit score

If you're beginning the loan process for the first time, start by getting your credit score.

You can usually find your score for no cost on your credit card statement or online account. You can also pay for it from a credit reporting agency. 

2. If something looks amiss, pull your credit report

Your credit score is three-digit number that measures your likelihood to repay a debt. It's based on the information contained in your credit report, which monitors all of your credit-related activity.

You can find your credit report for free on annualcreditreport.com from any of the three major credit bureaus weekly through April 20, 2022. While this report won't give you your credit score, it will show you information about your credit and payment history, which lenders use to decide whether to give you a loan. Reviewing your credit report can help you know what you need to improve.

3. Know that loans can actually boost credit scores

If you are looking to take out a loan to consolidate credit card debt, or pay debt down faster, it can help in more ways than you may realize. Making payments in a reliable, timely manner will have a positive impact on your credit score as the lender reports these payments to the three major credit bureaus. 

Paying down debt can also help improve your credit utilization ratio, which is the percentage of available credit you are using. Experts advise keeping this ratio at 30% or below. 

Taking out a personal loan can actually help boost your credit score because your credit mix — which refers to the types of different credit accounts you have — determines 10% of your overall credit score.

4. Understand that there are types of personal loans

There are two types of personal loans: secured and unsecured.

Unsecured are loans aren't supported by collateral, like a house or other assets. A bank evaluates whether to grant you the loan based on your financial history and credit score.

If you don't qualify for an unsecured loan, lenders also offer secured options that can be backed by assets or accounts you have at the bank or other things you own. Mortgages, home equity loans, and auto loans are considered secured loans, since you're putting up collateral.

Remember that if you take out a secured loan using your home, your car, or something else as collateral, you run the risk of losing those things should you become unable to pay your loans.

"Because unsecured loans don't require collateral, they are viewed as riskier and may have a higher interest rate to offset this risk," Krajicek says.

Some lenders that offer unsecured loans, including banks and credit unions, will also offer secured loans.

5. Make sure your bank offers personal loans

To get a personal loan from a bank, you'll generally need to be an existing customer with good credit. Some banks don't offer personal loans, so you'll want to find out what your bank does offer.

If your bank doesn't offer loans — or even if it does — you may want to get quotes from online lenders and credit unions. These options can be an alternative to bank loans, or a basis for comparison.

After you've checked rates offered by online lenders and credit unions, see if your bank will offer you a better deal.

6. Get your paperwork in order

One of the most challenging parts of getting a bank loan is the amount of documentation required.

The nature of the paperwork will vary based on the type of loan you're applying for. But in general, you can expect to need:

• Pay stubs/proof of income
• The last couple years of tax returns
• Documentation of 401(k)s and other financial accounts
• Photo ID
• Rent/mortgage history
• Proof of collateral, if you're pursuing a secured loan

Get these basics in order before applying for the loan, in order to speed up the process.

7. Try to get preapproved

Although it's not a solid guarantee, preapproval is when a lender extends an unofficial offer on a loan, pending full approval.

In this instance, preapproval will tell the borrower what loan amount, terms, and repayment schedule they will likely qualify for in advance. Also, a preapproval acknowledges that the borrower has met the bank's general eligibility requirements.

You won't impact your credit score if you check your loan rates for preapproval, because most companies only produce a soft credit inquiry when pulling your credit report. That won't be visible to third parties or affect your credit score. 

The process usually includes an application and a credit history evaluation. Remember that while it's a worthwhile step to take, there's no guarantee that the bank will extend the exact same terms when it comes time to issue a loan. 

8. Know the terms

Personal loans are installment loans, which is when you borrow a fixed amount of money and pay it back with interest in monthly installments over the life of the loan.

The terms of the loan can range from 12 to 96 months. When you complete the loan terms, that loan is considered closed. If more money is needed, you must reapply for a new loan.

Tabitha Mazzara, director of operations for MBANC, a consumer-direct mortgage lender, says there are a few questions you should ask yourself before signing on the dotted line. 

"You should know how much you need before going into it," says Mazzara. "What are the terms? When will I have to pay it back? What's the interest? Can I afford the payment? What are the fees?"

9. Make a plan to pay it back

After you get your loan, make sure you have a plan to pay it back. How much will you owe per month? Do you plan to pay the minimum required, or to make extra payments and pay it back more quickly?

Consider setting up automatic payments from your checking account once your paycheck clears, or calendar reminders to make sure you never miss a due date.

There are many steps you need to take to get a bank loan, and it is worth taking extra time to compare all your offers before settling on a particular company.