It is the case for many people that they only think about borrowing money or seeking a loan at the last minute – they do not plan for “what if” they need a loan in the future. Most people only plan to take out a loan when they need something like a car or a property, and they need some sort of financial assets, such as a mortgage.
However, it is best to be aware that the best thing you can do to improve your chances of not just simply getting an approval for a loan, but for getting a great deal on a low-interest rate, is to be pro-active. Do not simply wait until the time comes, take matters into your own hand way before you are likely to need an actual loan. You should get your credit score as high as physically possible so that you will be better off long term when it comes to taking out money as a loan at any point in the future. It goes without saying that the higher your credit score, the lower an interest rate you are likely to receive, ultimately saving you money.
What can you do to actively improve your credit score? In this guide, we will take you through some things you can do to make sure you are better off in the future, financially.
Review your credit history
The first step you should take is to “get to know” your credit history and your current credit rating. You can check your credit score online via companies like Experian, Equifax or Call Credit.
When reviewing your credit report as provided by one of these credit bureaus, you should look out for any errors or omissions. Any mistakes which are present in your report can ultimately, unfairly, lower your credit score. You will be able to have these corrected simply by using the contact information for each credit bureau or by contacting the creditors who appear to be involved directly in the misinformation.
You will also want to look out for ways to increase your credit score by using your report as a guide. You should aim to get on the Electoral Roll if you are not already on it, this way creditors can verify addresses and that you are in fact, a real person.
If you are renting a property, and therefore a tenant, talk with your landlord about the Rental Exchange. The Rental Exchange outlines how you pay your rent, this is a similar concept to how a mortgage loan may be reported. As a tenant, you may not be getting credit for paying your rent on time, but you should be.
Choose the right loan for you
There are plenty of loans floating about out there such as unsecured, secured, personal loans and more. Whatever you go for, you must research it first to make sure it is right, hence we offer a simple way to compare guarantor loans.
Applying for too many loans can damage your credit score, so make sure you know you are likely to qualify for the loan that you apply for. Shop around the market to find the best deals and terms. Terms such as the interest rate and the length of the loan should concern you. If 24-months of repayments for a loan for your budget, then only seek loans which offer this over, say, 36 months.
To help you work out your budget, complete an income and expenditure form. This form should outline your bills, debts and show you that you can afford the monthly payments. You also must consider the additional things which come with taking out something like a car loan, such as the expenses associated by purchasing a car, the insurance, maintenance and petrol – the list goes on.
Bad credit loans
Even if you have bad credit at the moment and do not have time to improve your credit score before you apply, you should still take on all this advice for the future. Furthermore, it will not impossible for you to get a loan with bad credit. In fact, there are plenty of options. Loans which are designed to accept applicants with bad credit are not reliant on credit scores or credit histories. Instead, the loans will be accepted on other factors.
The type of loans you can get include:
- Payday loans: If you are employed and have a bank account, then you should be able to take out a payday loan as long as you can prove you are able to repay it.
- Guarantor loans: If you have someone, such as a family member or a friend, who will agree to sign an agreement to guarantee the loan and you can show you can afford the repayments, you will be accepted for this kind of loan.
- Collateral loan: If you have an asset, such as property or a car that you can secure against the terms of the loan, you should be accepted.