Since the start of the credit crunch, lending companies are even more exacting in reviewing loan applications, particularly with unsecured loans. In fact, there has been an increase on the interest rates on tenant loans and personal loans to make up for the risk of payment default.
If you are planning to apply for a tenant loan or an unsecured loan, here are some reminders for you:
Build up your credit rating. Unsecured loans are also called tenant loans because it does not require the submission of your home property as collateral. Therefore, tenants or non-homeowners are given the chance to get approved.
With the absence of collateral, your personal credit history will be a major factor not only for the approval of your loan application but to your repayment terms as well. Needless to say, a lender would be more confident to extend a loan to a customer with good or excellent credit history than to someone with bad credit.
Furthermore, you will be in a much better position to negotiate for a lower interest rate or a better deal if you have impressive credit. On the contrary, a low credit score may even get your loan application rejected.
Before submitting your unsecured loan application, order a copy of your credit report from the three credit bureaus (Equifax, Experian, TransUnion) and see if there are errors that can be pulling down your score. If you discover that your credit needs improvement, you may consider delaying your loan application for at least six months while you work on improving your credit rating.
Close out obsolete accounts. If you have credit cards or store cards that you do not really need or use anymore, consider closing the account. Unless it is your oldest credit card that makes up the oldest part of your credit history, then having fewer credit card accounts in your name will make you a low risk borrower in the eyes of lenders.
Do not submit many applications at once. Each time you submit a loan application, an inquiry will reflect in your credit report. Applying for loans at different lending companies raises doubt to a potential lender. Submit only an application to the lender that you seriously want to take out a loan from.
Secure a stable employment. Being a regular or a long time employee of a company will be a big plus for you. However, if you have just been recently hired to a new job, you may want to wait until you’re past the probationary period before submitting your loan application. Because it is not secured by collateral, a lender may be hesitant to grant approval to someone with an unstable job.
Do not apply if your credit rating does not qualify. You want to check the standards of a potential lender, especially with regards to credit ratings. There are unsecured loan lenders that only accept customers with good to excellent rating. If you have poor credit, you may need to seek out a subprime lender.
Read More Tips on Applying for An Unsecured Tenant Loan
Resources for Unsecured loans, unsecured loan, Unsecured Tenant Loan, Unsecured Personal Loan
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