Applying for a loan with a bank or lender as an individual or small business owner can be a frustrating, stressful and at times mystifying experience. There’s so much we need to know as loan applicants and it often proves difficult to get our heads around not only what’s required of us, but also the factors that influence a banker’s decision whether to lend or not to lend.
Bankers don’t take risks
Although we’re seeing more advertising for ‘bad credit’ loans, loans aimed at those who’ve failed to meet their borrowing obligations in the past, bankers are by no means risk takers, so your main goal when applying for a loan as an individual or small business owner is to prove to him or her that you don’t present a risk. This is easier for individuals to do than it is for a small business owner, so if you’re applying for a loan for your small business bear in mind the 6 C’s of credit – capacity, character, conditions, contingency plan, collateral and credibility, pay these the attention they deserve, prepare yourself and you’ll stand a much better chance of being approved for a loan.
Whilst individuals traditionally don’t have to prove as much to bankers to be approved for loans, they do however, still need to make the banker feel safe. Present yourself well when applying in person and ensure that everything you need to back up your application is in order. Bear in mind they’ll be scrutinising your credit history and rating, and if you have a credit card and time before you plan on applying for a loan, use that credit card regularly to make purchases and repay what you owe quickly, this helps to improve your credit rating. Also, remember that any credit history you have often proves better than none at all, bankers would rather risk lending to someone who poses a slight risk than to someone who poses an unknown risk.
Applying for credit and loans: Don’t be overzealous
Your credit rating and history encompass more than just your repayment history; they also encompass your entire history of credit and loan applications. This is a very good reason for being selective of which banks and lenders you apply to and your financial situation when you apply to them, for as these applications will also show up on your credit history, the banker who’s looking over your loan application will wonder why you’ve applied and been rejected so many times.
As a consequence, be selective about which banks and lenders you apply to, how frequently you apply and your financial situation, learn from your mistakes and apply again, but make sure you’re in a better position the following time, all these applications add up to a poor credit history. Remember that bankers will be looking for the following when you apply – your ability to repay, your financial responsibilities and your chances of defaulting on the loan, if you feel that you’re lacking in any of these areas, chances are the banker will too.
An option that’s proved feasible for many borrowers, including those with bad credit ratings, is to apply for cash loans, an unsecured loan that’s quick and easy to apply for and most applicants, individuals and small business owners, receive an answer regarding their application that day. These aren’t large loans by any means, but if you’ve had credit problems in the past, or simply need access to money quickly and don’t have time to spend on bank loan applications, a personal loan like this could prove to be the solution you’re after.
By Boris Dzhingarov – Follow him on Google+