It may not be easy anymore to get a loan. Lenders are becoming stricter, especially due to the current economic conditions. And yet, people’s difficulties and therefore their desire for loans are increasing.
One may need a loan for just about anything. It can be for children’s education, debt consolidation, marriage, car purchase, property purchase, equipment purchase, and more. It can be anything, and yet the fact remains that there is a great demand for loan right now. You may need money urgently, but lenders may not want to give you anything, for any reason.
To increase your chances of getting loans, here are a few tips:
Check the loan eligibility before applying: Here’s a big mistake many people make. They don’t see the lender’s eligibility criteria and apply for the loan. Some understand that they are not eligible, but apply anyway just to get a chance, which never comes by the way. It is simple. If you do not meet the criteria, you don’t get the money. Worse, it can harm your credit score too due to a loan enquiry and denial.
Check your credit score before applying: Lenders want your credit score beyond a certain level, without which your loan application stands to be denied. Your credit score is a measure of your credit worthiness and how trustworthy you are in repaying credit. Your credit is important as it is based on previous loans, income, assets, repayment behaviors, and more. The score needs to be at least 700 to be considered.
Don’t apply for too many loans at once: This is another big mistake people make in their desperation to get emergency money. They apply at too many places at the same time. This, however, lowers your credit score, and banks can even deny you loans if they come to know you are asking at multiple places.
Multiple applications mean multiple rejections, since it signifies lack of ability to repay the loan and lack of confidence. The best thing to do is to research about a few lenders and pick the one who suits you most.
Correct errors in your credit report: You can see your credit report free once a year, and the cost afterwards is negligible. Studying the report will let you come across any mistakes. Mistakes and misstatements affect your credit score, and therefore many things in your life. Therefore, take your time to study the report. If you find mistakes, inform the concerned credit bureau. It’ll correct your report.
In case of rejection, don’t apply before 6 months: This is a common mistake as well. Right after a loan application rejection, people apply for another. The problem? It lowers your credit score, which in turn makes it harder for you to get credit later on.
Use these tips before applying or a loan or even a credit card.