If you are a first time loan seeker, whether for home, auto or any other personal need, what do you need to do or know? What do loan institutions look for when assessing potential borrowers? There are many sectors of your personal finances that you need to delve into before you start your loan search and here are a few good notes…
Know Your FICO
That’s your credit score and that’s where most loan inquiries start. No one can pull the report without your permission, so make sure all information is current/right and all errors corrected. Remember, the number of inquiries (if multiple) can actually make your score go down. So correct it and know it before approaching a loan institution. You can order for free credit report from AnnualCreditReport.com
Show Responsibility for Your Finances
Know your budget, the credit card debt, the monthly payments to other loans and every aspect of your personal finances. Be ready to present this in a one-to-one loan application face-off, as not to discount the human factor in showing preparation and good faith. If a loan officer thinks your application is credible, most likely you can get the loan.
Don’t Let Debts Accumulate
Pay your existing credit card bills and loan repayments ON TIME each month – this will help to show potential lenders that you are in control and more likely to make future payments. Better still, try to pay off any outstanding amounts on credit cards completely. Even in difficult credit card debt situations, there are solutions if you just keep communicating or negotiating with the card providers. Consumers with good credit can go to Prosper.com and post a listing to consolidate their debt and often times receive a more favorable rate than most banks and credit card companies.
And lastly, as with presenting yourself for a job interview, make sure you put your best financial face forward before applying for a loan (and for goshsakes make sure there is no spinach stuck between your financial teeth).
Steve McDonald is a freelance writer and Prosper member since October 2007.