Since the pandemic rolled in, the global market hasn’t been what it used to be. With people left facing financial challenges, one of the best resources anyone can turn to at the moment is securing a loan. Yet, this avenue isn’t always accessible to everyone for different reasons. If you’re thinking about getting a loan, there are a few things you need to attend to before you commence the loan application process in earnest. Doing these things will help you better prepare for the loan application process and increase your chances of getting the financial assistance you need. Some things you have to attend to before getting a loan include;
1. Analyzing Your Latest Credit Report Information
One of the most critical factors in determining whether you get that loan is what your MyCTOS is saying. So, be proactive. Request and review the most recent copy of this report to know where you stand. That way, you’ll know whether you need to take any steps to improve your credit score.
2. Don’t Take On New Debts Before Your Application
If you aren’t already aware, please know that every loan application you tender is input into your record in the Central Credit Reference Information System (CCRIS). It means two things. The first is that there’s no loan application you make that flies under the radar. The second is that your credit score will decrease slightly each time you take out a loan. The more loan applications appear in your CCRIS; the fewer banks are likely to consider you as they’ll think you’re simply a risky borrower looking to score more credit. So, make sure you don’t take on new debt when you want to apply for a loan.
3. Boost Your Debt-to-Income Ratio As Much As You Can
A debt-to-income ratio refers to the portion of your monthly income that goes into paying your debts. If you want to increase your chances of getting your loan approved, do everything you can to keep what you use to pay off loans below 40% of your total monthly income. In essence, try to increase your income and conversely lower your debts.
4. Take Your Time to Explore Your Options
Interest rates among financial institutions are anything but uniform. You can use that to your advantage. Check out as many loan providers as you can. Compare their interest rates as well as terms and conditions. That way, you’ll be able to find the best package for yourself.
5. Secure and Arrange Your Income Documentation
One of the things that may slow your application process is getting the necessary documents for proof of income. However, by getting things like your bank statement and other documents at the ready, you’ll be one step closer to getting your approved loan on time.
While getting your loan approved isn’t a walk in the park, following the guideline we’ve highlighted will make it easier for you.