Getting a loan, whether for personal use or for a business, can often save the day or help you take advantage of a new opportunity. If you’re strapped for cash, a loan might just be the ticket to a better future. However, you must use care and caution when seeking a loan, and you must follow the guidelines lenders have set up. Being thoughtful about how you seek a loan will help you find and get the perfect loan for your specific needs.
Optimize your credit report. Your credit history is the record of your behavior relating to how you borrow money and pay it back. Your credit report is the main determinant in your ability to get a loan.
Get your credit score. In addition to your credit report, getting your credit score is a good idea. Generally, a credit score of 640 or above is considered above average and will not give you problems when applying for a loan. If your score is below 640, you may have a tough time finding a lender that won’t charge you a high-interest rate or impose other conditions on your eligibility.
Establish a stable source of income. Your income is equally as important to getting a loan as your credit. Not only will you need a current source of income for loan approval, but you will also need a stable history of earning income.
Gather documentation. You will have to prove your ability and willingness to repay a loan to get approved for a loan. You will need to provide supporting evidence of these qualities in the form of a credit report (which the lender can pull), bank statements, pay stubs and/or income tax forms.
Determine the amount of money you need to borrow. The size of loan you need will help narrow your lender options. Additionally, it is necessary to determine that you can afford the payments on the loan size you need.