Credit is essential in a world of big-ticket items. Few families are able to afford a home, car, and other necessities without some form of credit financing. So, what happens when your credit is denied? How and when should you fix credit issues standing in your way? Follow the tips below to avoid credit denial and smooth the way for a better financial future.
- Provide complete info. In some cases, credit denial could be as simple as forgetting to sign the application. Be sure to review your application carefully and include all the necessary information. Lenders need a complete overview to evaluate your creditworthiness, and it is your responsibility to provide it.
- Set realistic borrowing goals. While it may be fun to dream of the palatial four bedroom home and expensive car, affordability is another matter entirely. Lenders look closely at your income and other credit commitments during the application process. If your current debt obligations exceed 50 percent of your gross income, don’t expect creditors to come knocking at your door. Examine your budget, and be realistic about what you can afford. Lenders will be more willing to work with a responsible candidate.
- Fix credit issues. If you are struggling with bad credit, why add more responsibility to the mix? Before applying for a new loan, begin by paying off old debts, addressing late fees, and paying attention to your credit utilization ratio. If you are feeling overwhelmed, talk to a credit repair expert who can evaluate your credit reports and offer tips to help raise your credit scores. Each step toward credit repair is a positive one; strengthen your borrowing power by polishing your existing accounts.
- Pay your dues at work. Income is a deciding factor when it comes to receiving new credit. Not only do lenders want to see a healthy employment record, they want to see it long-term. If you are a new-hire, you may need to put loan aspirations on the backburner. Lenders want borrowers they can trust, and financial security is readily established with a solid employment history. Pay your dues at the office, and revisit your buying goals in six months. Buying power grows with time.
- Build a robust credit file. In addition to fixing bad credit issues, strengthening a flimsy credit file is an effective way to work toward loan approval. Many lenders have unwritten policies that give preference to well-established borrowers. When reviewing your credit history, ask an expert how you can safely build up your credit report without overextending. Fixing your credit could be as simple as adding additional accounts to the mix.