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May 10, 2012

How to Become a Good Loan Candidate

From car purchases to mortgages, almost everyone needs loans throughout their life. When you need a loan, you’ll want to ensure you are able to get the loan you need, at a desirable interest rate. That’s why you should do everything you can to make yourself a good candidate for a loan.

How to become a good candidate for a loan:
  • Pays your bills on time—every bill, every month.
  • Maintain a good credit score.
  • Save for a down payment or find a source for down payment funds.
  • Have a good source of collateral (i.e., your home or business) 

Your Credit Score
A credit score is primarily based on credit report information typically sourced from credit bureaus (see below). Maintaining a good credit score is a key factor in determining your suitability for a loan. If you are just starting out establishing credit, or need to improve your credit, here are a few things to keep in mind:
  •  Avoid maxing out credit lines on cards or loans.
  • Avoid applying for excessive credit (numerous department store credit cards can add up).
  • Consistently make payments on time.
  • Pay down the balances currently on credit cards or loans.
  • Satisfy any “past due” bills.
  • Request and review copies of your credit report and verify the information for accuracy.


Obtaining a Credit Report
You are entitled to one free credit report—within a 12-month period—from each of the three major credit bureaus. The bureaus run AnnualCreditReport.com where you can get your free credit report. Your credit score is available for an extra $10 fee. If you dispute something on your report you can request an investigation and/or ask that a note be included in your file. The FICO credit score is the most common. It ranges between 300 and 850. As a rough rule of thumb, ideal loan candidates—those with the easiest time getting a loan at the lowest interest rate and associated fees—usually have scores above 740. Bank of Luxemburg will work with each customer on an individual basis to find the best loan option for you, even if your credit score is not ideal.

If you have questions about obtaining a loan, contact your local Bank of Luxemburg for information and advice.



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