How to Apply for a Loan and be Successful: Get a Credit Rating Check Prior to Submitting Your Loan Application

Each time a consumer makes the decision to apply for a loan a record of the search remains on a personal credit report for a period of 12 months. If too many loan applications are made, it will set off alarm bells with lenders. It is imperative that a borrower checks their credit report, is realistic about their repayment history and then opts to apply for a loan that has a greater chance of being accepted.

Credit Rating Checks

Any consumer that wishes to make a loan application should order a copy of their credit report prior to getting a credit rating check. A copy can be attained from credit reference agencies, such as Experian, for just £2. This allows a borrower to scan their credit history for errors. Any erroneous data held can be challenged and removed, although this takes several weeks to achieve in practice.

The Electoral Register and Loan Applications

Only apply for a loan when once showing on the electoral register; this part of the search is a fundamental part of the overall credit rating check. A secured or unsecured loan application is vastly more likely to be accepted once the borrower is registered as it allows the lender to be sure that the borrower genuinely does live at that address.

Loan Applications for Consumers with a Good Credit Rating

A credit rating check holds no perils for consumers with a good credit rating. Always use a price comparison site, such as moneysupermarket.com, to trawl the market for the most competitive deals. Apply for a loan that offers the most attractive terms; never apply for multiple loans at the same time as it is likely that all applications will be rejected.

Where to Apply for a Loan with a Bad Credit Rating

Missed or late payments will mean a bad credit rating. It is important to know where to apply for a loan as applications to mainstream lenders will be rejected. Unsecured loans are available from adverse credit lenders, such as providentpersonalcredit.com. Pawnbroker loans, logbook loans, payday loans and Credit Union loans are other options. The interest rate charged will reflect the risk posed to the lender. Provided sufficient equity is available, a secured loan may offer homeowners more attractive terms.

Consumers wishing to apply for a loan should always order a copy of their credit report prior to getting a credit rating check. Loan applications from bad credit rating applicants should rarely be made to mainstream lenders as missed or late payments will result in an automatic decline. Whilst a secured loan is more likely to be accepted, borrowers should be aware of the greater risks involved.

The Stranglehold of Student Loans

Completing the requirements to receive a college degree is supposed to open a whole new world of opportunity to the new graduate. But the increasing costs of attending college are stealing the dream of financial freedom from many. I am one of the many college graduates that have experienced the crushing reality of drowning in student loan debts.

Student loans are how many college students manage to finance the staggering costs of higher education. We willingly enter into thousands of dollars of debt to pay our college tuition and buy books. The student loans that are offered are always for more money than what is needed to cover the educational costs of the semester. The left over funds could be returned to the lending institution but most students use the extra funds to cover living expenses or pay for vacations.

My total student loans topped $18,000 on my college graduation day. I did not use any extra loan money to fund spring break trips or other such frivolous things. As a married, non-traditional student, I had more expenses to cover than most college students. The excess money that was offered with my loans was used to help cover living expenses such as rent and groceries. I would not have been able to continue in college full-time without using the excess student loan money to cover these necessities.

Upon completion of my degree I looked forward to working full-time and using my education to build a comfortable lifestyle for my family. But when I graduated the job market was in a down turn after the terrorist attacks of September 2001. As a recent college graduate I was forced to take a position in technical writing and completed work that was only remotely related to the disciplines of my degree. As I continue to grow my career in the mass communications industry I am still disappointed in the pay scale of the opportunities I find. I always knew that my chosen profession was unlikely to earn me a six figure income but I never expected it to leave me scratching to keep even with the financial poverty line. I find that I am left questioning the value of my education that plunged me into such deep debt.

My loans were originally scheduled to be paid off by the end of 2010. Unfortunately, I have a little less than half actually paid off although it is now past that ten year mark. The financial burden of trying to pay back the loan mixed with a poor paying job market has forced me to place the loans into deferment a couple of times. I have also requested the payments be stretched over a longer time period in order to keep from defaulting on them. The advantage to this is that my monthly payment amount is less and therefore more manageable. The downside is that I will end up paying more in interest by the time it is all said and done.

The result of my college education and student loans have left me struggling to build the financial future I had dreamed of as an eager young college student. As I look back now I would have rather taken longer to get through college and paid for it as I went.

Family Loans: Loaning or Lending Money to Family Members

Having a fair amount of savings is a blessing people bestow upon themselves through diligent budgeting, hard work, and living below one’s means. One of the great things about keeping the money one makes is that it can be used to help worthy causes and loved ones.

When it comes to helping loved ones through a family loan there are some inherent risks. The challenges that come with loaning money to family members begins with a clear understanding between both parties.

The Lending Terms of a Family Loan

When loaning money to a family member it is imperative that the transaction is treated as though business is being conducted. This is for the good of both parties.

The terms should specify what amount is being lent, how long it will be paid back in, the payments to necessitate this period, the interest rate (if any), and the results of non-payment.

Should you Lend Money to Family?

If this process of creating a contract with an impartial witness, such as a notary public, seems uncomfortable, it will be even more uncomfortable if no contract is made and the family member who received the loan pretends nothing of the sort had ever happened.

Some family members are great candidates for receiving a loan, and others should seek the assistance of a bank, leading the answer to the above question, ‘should you lend money to family?’ to be, it depends on the family.

If the lender is going to feel a right to tell his family member’s personal business now that he or she is his banker, then this is a person who should not loan money to family. If the borrower is going to feel entitled to the money if paying it back is less comfortable than taking a vacation and buying a new car, then this is a person who shouldn’t be lent to.

Pros and Cons of Loaning Money to Family

There are several reasons not to lend money to family, but on the side of where it is good includes:

  • Helping a loved one
  • Keeping money in the family
  • Gaining experience in business

Cons of giving a family loan are often discussed by radio show host Dave Ramsey who says on The Dave Ramsey Show that ‘Thanksgiving dinner tastes different when it’s with your banker.’

In addition to this, the lender must not loan more than he has the capacity to forgive both emotionally and financially. If this amount is $0, then the con here is that the lender realizes he needs to either change his financial habits, or his ranking of importance of money.

When giving a family loan it is important to understand that the loan may end up becoming a gift. If this transition cannot occur, then the relationship can end up in ruin, and that isn’t worth any amount of money.

What’s Behind a Credit Report?

We all hear about credit reports and how important they are to you. The better yours is, the more money you can save if you need a loan or any other type of credit. Even insurance companies are now taking a look at credit reports when deciding on your premiums for the year. Let’s face it, we are not considered people anymore, we are considered a number – and that number is our FICO score.

It’s important for you to know what’s on your credit report. Identity theft is on the rise, and you want to be sure you haven’t become a victim. Even simple things can show up, a store might have made an error, a bill maybe never made it to your new address, the reasons could be endless. Most Americans have no idea on what’s listed! You are entitled to a free report every year, from each of the three major reporting companies, which include Equifax, Experian and TransUnion.

What are scores and what do they mean? A score at its lowest starts at 300. If your number falls in between 300 and 549, chances are you’re not going to be able to get that loan you were hoping for. You are considered a very high credit risk. Sometimes, it can be as simple as not having any credit; it doesn’t mean that you haven’t paid your bills.

From 550 to 699, you are considered a medium risk. You might get the loan, but you will most likely have to pay a higher interest rate. From 700 to 850, you should have an incredibly smooth loan process and you’ll receive the best interest rates.

Several different things, including no history of debt, high debt compared to income and your payment history, can determine your score. What helps is if you pay your bills on time, only hold 2-3 credit cards and keep the balances below the limit. Paying more than the minimum due will also help. Establish a long term credit history if you can.

What will hurt you is if you have too many credit cards or none at all. High debt and delinquent accounts, bankruptcy and charge offs are some of the worst to have.

If you have bad credit, don’t despair. It won’t follow you around forever if you start on the right track today to get it straightened out. Do your best to pay your bills on time, and make sure you get your annual credit reports so you know what is on there. Know your score, and do your best to maintain and improve it. While I’m not advocating taking out loans, a fact of life is sometimes we need them!