Loan requests that are made during difficult economic periods, require that consumers position themselves for a favorable loan approval. Here are 5 tips for improving credit scores and increasing your chances for loan approval.
1. Accept responsibility. - Be honest with your lender and yourself about any derogatory items that may linger within your credit report. Re-visit the circumstances and demonstrate why you are in a better position now.
2. Be prepared. - Ensure that you have seen a copy of your credit report and credit score prior to applying for a loan. This will allow you to correct any mistakes that appear on your credit report. Additionally, you will have less to explain about small balance collections and past due balances. Increase your odds of getting approved by addressing these items before you apply for a new loan.
3. Limit your inquiry types. - Avoid applying for more than 1 type of credit every 6 months. Lenders think that borrowers who apply for loans every other month are some what risky. You may be the exception, but don't bank on it, as credit scoring has proven over time to model good and bad types of risk and consumer behaviors.
4. Pay down your debt. - Reduce your available credit balances to less than 25% of their high credit limits. This will project responsible usage of credit. Lenders frown on consumers that utilize their maximum credit limits.
5. Make timely payments. - Paying your bills on time is the most important thing towards building better credit and improving credit scores.
Finally, check out Score 1st for helpful credit advice and visit our blog.
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