Tips to Help You Successfully Get a Loan

Loans can be useful for many things, and can really come in handy at the right moment. But you must be careful not to overextend yourself and not to get locked into a "bad deal."

There are all kinds of fraudulent loan services out there that try to pull you in with their sweet promises of guaranteed loans, even if you have bad credit, or if you have been turned down in the past. Many don't tell you, or try not to tell you that they'll charge you an arm and a leg in interest on your loan. Basically, anyone who offers a loan for people with poor credit could be looking for those people with economic problems so the lender can charge higher interest rates and excessive fees.

If you have credit problems, a little bit of homework beforehand can help you get approved, and can save you a lot of money in interest charges. It really doesn't take that much longer to find out what the lender wants, and if you can be approved from that certain lender, and even if you have to take care of problems on your credit before you apply... in fact, that's the type of information that we specialize in.

For example, if you look in the right places, you can get a small business loan. In other words, a loan guaranteed by the government to help small business owners, for business items, such as improvements on their establishments. These loans come at reasonable rates. And as the business grows, once the business owner pays back the first loan, they can apply again for another loan to expand their business. A good place to start for this type of loan can be at your local bank.

There are also loans for education. College loans can be found for those that may have economic problems, those that may have good grades, and even for those individuals that are going into a program which may not have enough students applying to that program or in that field of learning. While it may be difficult to pay for college on a small income, most college loans defer the repayment until after the individual graduates. Many people have received loans to go to college and then repaid them after graduating and succeeding outside of school. It is very common and is one of those things that has a tremendous benefit to society.

Here's some tips that you might not see anywhere else. Be sure to do these things before applying for a loan, as it can greatly enhance your chances for success.

Loan Success Tip #1

Try to get your debt to available credit card credit ratio under 50%. If you have several credit card payments, try to take one of your cards and pay it off, even if you have to make a smaller payment on the other card(s). Just be sure to make at least all of the monthly minimum payments to keep everything current.

As an example, suppose you have two credit cards, each with a $5,000 credit line. Also suppose you have $4,500 charged on one card and $600 charged on the other card, and that you've been making payments of $400 per month on each card. Currently, your total debt to total credit card limit is at $5,100/$10,000 or 51%. A ratio over 50% can make it harder to get approved for a loan.

Instead of paying $400 on each card ($800 total), completely pay off the one credit card debt at $600, and then pay the remaining $200 on the other card (which should still be more than the minimum required payment). By doing this, you'll have one card paid off, and a balance of around $4,400 on the other card. This puts your total debt to credit limit ratio at $4,400/$10,000, or 44%. Lenders like to see this ratio at less than 50%, and are more likely to grant a loan request when they see this.

Using this same example, this is also the reason why you shouldn't cancel a paid off credit card. Besides having a favorable payment history for the paid off card, if you cancel that card, then your available credit would only be $5,000 and you'd still have the $4,400 debt on it, which would be an 88% debt to available credit ratio, and it would have a negative effect on your credit.

It's strange how it works that way, but the main point is not to cancel a credit card after you pay it off. Keep it active, and charge a little here and there and pay it off each month. The main thing is to keep more of the credit line available on your credit cards than what you have charged up on your cards.

If you're wondering whether a personal loan is better for you instead of an additional credit card, see this information about personal loans compared to credit cards.

Loan Success Tip #2

Before applying for any type of loan, ask the lender what credit bureau they use. For example, if you're buying a car, find out what lenders the dealer uses and then what credit bureaus the lender uses. Or if you're applying for a home loan from a bank, find out what credit bureau the bank uses.

Then ask them, "what's the lowest score they will accept."

Next, get a copy of your credit report and make sure everything is correct. When you get your credit report also ask for them to include your credit score.

If the score is above what the lender's criteria, then go ahead and go back to the lender and apply for the loan.

If the score is below what the lender accepts, see if there's any errors on your credit report and then work on correcting them.

The credit bureau can explain what to do to dispute incorrect items. You don't need a company to do this for you, you can do the same job yourself and challenge credit marks on your own (and for much less cost).

And suppose that you have a low credit score is due to problems you may have had in the past, and that the score is lower than the lender would accept. Talk to the lender and see if they would do "hard cases." If not, don't apply, and find another lender. If you talk to a handful of lenders, chances are that someone will find a way to help you.

The main thing to keep in mind is that if you start off with these two loan success tips in the beginning, you'll save yourself a lot of time, and greatly increase your chance for obtaining the loan you want.

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