Anyone with a source of income and okay credit could land a loan in the past, but things have changed substantially. Most people cannot walk in, apply for a loan, and run out with a brand new car or home in one afternoon in our current lending market. Applying for loans now involves an extensive application process that can stretch out for those lacking excellent credit and down payments. Lenders are on edge and unwilling to take many risks. Most people now find it difficult to get loans they need, but most will eventually get accepted.
Regardless of what you need to secure loans to purchase, there are ways to make yourself look less risky in the application process. You should never accept any loans unless they include favorable terms. The following are five things you should check into prior to applying, so you boost your chances of getting approved for the loans you need.
Check Your Credit
Never apply for a loan in advance of checking your credit report. There are three different credit bureaus, so make sure you get a copy of all three reports. Not all businesses will report to all three bureaus. This means that all three of your reports could have different information. Since the data varies, your FICO scores will also vary between each of the reporting agencies.
Lenders will take into consideration all credit reports and all FICO scores when they decide if you are suitable for a loan. You want them to be as impressive as possible, but as a general guideline you are aiming for FICO scores in the 700s. When you get below 700 even for one score, you appear to be a much higher risk for lenders.
Closely analyze all of your reports and dispute any false information. If you have low priced unpaid debts, make payment in full and request the credit bureaus be updated. You might want to request something in writing that establishes that you have paid off those debts. Revealing those letters to lenders may give them more comfort with you.
Eliminate Debt
If you have substantial credit card debt, now is the time to start paying it off. Lenders look for borrowers who have more free credit than used credit. The best credit histories feature open credit accounts that are not maxed out, and which have available credit. You achieve this by lowering credit card balances, but holding the lines of credit at your disposal.
Make sure your established lines of credit remain open to you. You may need to make regular purchases on some accounts to keep credit lines open, but you have to pay them right back off to carry a low balance. Open credit is a signal that you have been trusted by other lenders, and that you are responsible enough to handle that trust. High balances show the opposite, by signaling that you are spending beyond your means or are not using credit responsibly.
No More Credit Cards
When you apply for a new line of credit, it will become a part of your credit report. When a lender notes that you have recently applied to many different lenders for credit, they know you are searching. They may not be able to see how many of those inquiries led to an extension of credit, but it doesn't enhance your case. It is in your favor to reserve the application for lenders that you really want to do business with.
Do Not Quit Your Job
Lenders prefer to deal with people who have held one full-time job for many years. Those with consistent work histories are seen as less of a risk than those who change jobs frequently or seem to fail at keeping a job at all. Lenders will want some proof that your employment is secure, so be ready to prove it.
Save for Your Down Payment
Finally, offer up as much of your own money toward this purchase as possible. Lenders tend to back away when you want them to pay out without putting your own money on the line. Why should anyone invest in your interest, when you are not able to invest in yourself?
Remember that most people will have to put off applying for loans while they strengthen their case on one or more of these points. This interferes with the process of getting your loan, but so does getting rejected because these things are not in order! It is better to get ready ahead of time so you look good on paper. You do not want lenders to mark you down you as a risk.
Regardless of what you need to secure loans to purchase, there are ways to make yourself look less risky in the application process. You should never accept any loans unless they include favorable terms. The following are five things you should check into prior to applying, so you boost your chances of getting approved for the loans you need.
Check Your Credit
Never apply for a loan in advance of checking your credit report. There are three different credit bureaus, so make sure you get a copy of all three reports. Not all businesses will report to all three bureaus. This means that all three of your reports could have different information. Since the data varies, your FICO scores will also vary between each of the reporting agencies.
Lenders will take into consideration all credit reports and all FICO scores when they decide if you are suitable for a loan. You want them to be as impressive as possible, but as a general guideline you are aiming for FICO scores in the 700s. When you get below 700 even for one score, you appear to be a much higher risk for lenders.
Closely analyze all of your reports and dispute any false information. If you have low priced unpaid debts, make payment in full and request the credit bureaus be updated. You might want to request something in writing that establishes that you have paid off those debts. Revealing those letters to lenders may give them more comfort with you.
Eliminate Debt
If you have substantial credit card debt, now is the time to start paying it off. Lenders look for borrowers who have more free credit than used credit. The best credit histories feature open credit accounts that are not maxed out, and which have available credit. You achieve this by lowering credit card balances, but holding the lines of credit at your disposal.
Make sure your established lines of credit remain open to you. You may need to make regular purchases on some accounts to keep credit lines open, but you have to pay them right back off to carry a low balance. Open credit is a signal that you have been trusted by other lenders, and that you are responsible enough to handle that trust. High balances show the opposite, by signaling that you are spending beyond your means or are not using credit responsibly.
No More Credit Cards
When you apply for a new line of credit, it will become a part of your credit report. When a lender notes that you have recently applied to many different lenders for credit, they know you are searching. They may not be able to see how many of those inquiries led to an extension of credit, but it doesn't enhance your case. It is in your favor to reserve the application for lenders that you really want to do business with.
Do Not Quit Your Job
Lenders prefer to deal with people who have held one full-time job for many years. Those with consistent work histories are seen as less of a risk than those who change jobs frequently or seem to fail at keeping a job at all. Lenders will want some proof that your employment is secure, so be ready to prove it.
Save for Your Down Payment
Finally, offer up as much of your own money toward this purchase as possible. Lenders tend to back away when you want them to pay out without putting your own money on the line. Why should anyone invest in your interest, when you are not able to invest in yourself?
Remember that most people will have to put off applying for loans while they strengthen their case on one or more of these points. This interferes with the process of getting your loan, but so does getting rejected because these things are not in order! It is better to get ready ahead of time so you look good on paper. You do not want lenders to mark you down you as a risk.
About the Author:
If You Are Struggling To Keep Your Finances Afloat, You Need As Much Help With Payday Loans As Possible. Read About One Of The Best Sources Of Help With Payday Loans.
No comments:
Post a Comment