Are you ready for a loan?
Over the past few years, lenders have tightened loan criteria to ensure that they only approve credit to borrowers who meet strict loan servicing requirements.
So it is a good idea to ensure that your finances are in order before your make a loan application.
There are a few simple and easy things you can do with your finances to improve your chances of getting a loan, and to boost your borrowing power:
1. Clean up your credit cards – this is an easy area in which you can maximise your borrowing power. Cancel any credit cards that you do not need and ensure that you make regular repayments to those that you have.
2. Keep your financial records up to date – lodging your tax returns and keeping records of all of your income and liabilities will benefit your loan application. Some lenders will treat income differently to other lenders, and might require more paperwork to prove your income. Spend some time updating your records, and collating any necessary paperwork, so that you are prepared if the question is raised.
3. Consolidate debt and liabilities – Debts such as personal loans or credit cards have short repayment terms and high monthly repayments because of their unsecured nature. If you have high repayments, this could affect your borrowing power, so look to consolidate your debt and reducing it. A good trick is to look for credit cards with low interest rates. And ensure you repay more than just the minimum monthly payment.
4. Start saving – Having a deposit, or being able to show that you have the ability to save, is very beneficial when applying for finance. If you can’t save much, perhaps try and cut down on little things, such as buying coffee at work. Saving a small amount each day can still go a long way and will help you in the long run when a lender looks at your application.
5. Check your credit report. For a fee of about $60 a year you can see what the credit world thinks of you, before you apply. A credit report lists your poor credit history (if any) and any defaults you might have had over the last few years. It is also handy if you want to know when someone tries to open a phone account in your name.
By Marie Mortimer. You can follow Marie on Google+
Image credit: StockMonkeys.com