You might think it is easy to apply for a loan because you receive tons of emails and calls from banks and other financial institutions regarding a loan. True, but you have to remember that there is still a possibility for your application to be denied.
Don’t risk your chance of a loan especially if you are in dire need of it. There are various ways you could improve your application for a loan such as fixing your credit report, completing your financial records, and having an emergency fund.
Fix Your Credit Score
A report regarding your credit score is the first thing that banks and financial institutions check to determine if you are eligible for a loan. This report would show them that you are not a “high risk” applicant and that they would not lose money by lending you. There are different things you could do to fix your credit score. The first thing you need to do is of course to know your credit score. Get your credit report and see how much “fixing” you need to do with regards to your score. Once you receive your report, check it thoroughly.
If you find any mistakes, dispute these errors for these would definitely affect your score. Paying your bills on time could also fix your credit score and if you could settle one credit card, do so. But, don’t close the account after you have paid what you owe because accounts that have been opened longer (especially if you are always paying for it on time) are more helpful to increase your credit score.
Complete Your Financial Records
When you apply for cash loans, you would be asked for a lot of supporting documents to show that you could pay for the loan. Every bank and financial institution have different requirements but prepare any documents that you feel are relevant to show that you are a good payer or that you have a monthly source of financial resources. If you are employed, prepare your latest 3 months of pay slip and statement of accounts. Ask for a certificate of employment as well and if you are self-employed or a freelancer, prepare your tax records and other financial records with regards to your business or freelance work.
Have An Emergency Fund
This might confuse you since you are applying for a loan because you are short in cash. But showing the bank or financial establishment that you have an emergency fund (3 months of your monthly expenses), you still have the means to pay the money that you owe them. A safety net like this would also keep you from being overwhelmed while you are paying your loan.
Once you managed to complete your financial records, set up an emergency fund and fix your credit score, the chance of your application for a loan could be approved although, you still need to keep your credit score healthy by setting up auto payments, asking for professional help and advice and opening various types of credit such as mortgage, car loan and or a new credit card. Just make sure though that you could pay all these on time.