subject: Loans: Are You Ready? [print this page] Loans: Are You Ready? Loans: Are You Ready?
Getting a loan should not be a last minute decision where you talk to the lenders and hope for the best if you want the best deal. If you want a good deal, or at least to qualify, you must prepare ahead of time in order to ensure you can get what you want without any surprises from what the lenders say about your credit. Yes, it all boils down to credit, and your income versus debt ratio. So, you must first ensure that you have good credit, or at least good enough. Second, you must try to be as debt free as possible.
Lenders give out low interest rates if they want your business because they see you as very low risk of not paying back the full amount of the loan by the end of the term. If they think you are a person they will not need to worry about, they will try to entice you with a low interest rate since they will want your business. However, if you have good credit, but you are high in debt, and your income does not make up for the amount of debt you are in, they will most likely still consider you high risk. They will imagine you having difficulty paying off the loan since you will not have a lot of extra money (a lot of it will be tied into the debt). Plus, the debt will prove to them that you have difficulty paying things off in full because you do not have enough money in the first place, so this loan, in their eyes, could aggravate that problem even further.
Since having good credit is very important for getting loans, you may be wondering how you can tell exactly how good your credit is. Basically, a score over 800 is excellent credit, 750-800 is very good credit, 700-750 is good credit (anything between 678-720 is average credit), 650-700 is fair credit, 600-650 is bad credit, and a credit score under 600 is very bad credit. It is easy to check your credit score often since you can do it on-line, and often times, free of charge depending on which websites you use.
