Borrowing money should never be a simple decision, but it must be thought through carefully before. Borrowing money without doing the work before properly increasing the risk that you will end up with future financial problems.
Here in the fourth section of this series, we continue to address various good points for you to consider before applying for a loan, the focus now is a little more on things more around the loan or application itself. If you want to read the third part you can do it here. There we address points such as interest-free loans, maturities and what you can think of for the unexpected.
Your credit rating
All lenders who lend money in some serious way always do a credit check on a potential borrower. If you use a loan broker, they do the credit check and then share it with the lenders. In some way such a test is carried out and it should not really be seen as something negative as it is simply a way to ensure that your finances are good enough to borrow money. However, what you can do is influence the result.
When the application is made, there is nothing you can do but if you know that you are going to borrow money there may be things to do in advance.
- Unused credits – In recent years it has become popular with online loans as it is a convenient way to get money fast, these have largely taken over from the SMS loans. However, it does not have to be such credits but it can be extra credit cards, subscriptions or installment purchases that have been cleared. On the credit check itself these will appear which is not positive for you. If you have unused ones then take and contact the ones you have them with and terminate the credit itself.
- Number of loans – Many loans are not good on a credit check. If you can then collect these into just one or a maximum of a few loans, it will look clearly better. A further advantage of this is that the interest rate on a large loan is normally clearly lower than on many smaller ones.
- Taking care of your finances – Generally you can say that you should only take responsibility for your finances because if you do, it will appear on the credit check. Pay all bills on time, for example, so that there will never be the question of any payment remarks that are among the worst that can be seen in a credit check.
Of course, this is a factor that does not suit everyone, but if they are part of a couple, married or cohabiting and the loan should be something in common, it is often an advantage to apply together. If only the other person is a person with an okay result in a credit check, it becomes positive in the eyes of the lender as the likelihood of two people being able to repay a loan is greater than just one being able to do so. Security, which is what lenders like.
Just keep in mind that the co-applicant should just have a good credit rating, as a co-applicant who has payment notes, for example, risks causing the application to be denied instead.
Not too many credit reports
It is difficult to say an exact figure of how many credit reports are too many. But in short, it can be said that it is a warning signal for a lender if there are many such registered on you a short time before you want to borrow money. This is for two main reasons where the first is that there is a certain delay in the system itself. So you can basically have taken many loans for a very short period that are not yet visible on the examination. Together, these could mean that you are not creditworthy enough for the intended loan from the particular lender looking at you.
Other reasons are largely the opposite but also negative for a lender. Can you just imagine how you would reason if a policeman came and wanted to borrow money from you after asking many other friends who all refused to lend money. Why did they do this? Similarly, it becomes for a lender.
Therefore, try to keep down the number of tests that have been performed. Then it is absolutely not so that you are denied immediately if there are three pieces registered but it is unnecessary that you should try to avoid. Examples are if you first decide to contact some banks yourself and see if they want to lend you money when you have already planned to test with a loan broker who works with these banks. The result will be the same but an extra test is done for each extra you contact.