Your credit score is a number that lenders use to assess your creditworthiness. It ranges from 300 to 850 and tells them how likely you are to pay back your debts on time.
Your score is determined by various factors, including payment history, credit usage and length of credit. A higher score can help you qualify for better interest rates and terms on loans, credit cards and other types of credit.
1. Get Your Loan Documents in Electronic Form
When you apply for a loan, youll need to provide your lender with your personal and financial information. This includes your name, address, phone number, social security number, employment history and bank account information.
Your lender will need these documents to assess your risk and decide whether to approve your loan application. It might also ask for proof of identity, such as your drivers license or passport, and a proof of income, such as a W2.
A good idea is to keep copies of all of your loan paperwork. It will help you keep track of your account activity and ensure that you meet all reporting requirements.
Before you sign your loan, make sure that you read all of the terms and conditions. This is the part of the agreement where youll find your loan amount, interest rate, repayment term and any other important details.
Youll also want to look at the collateral requirements in your contract. This section will tell you what type of collateral your lender is willing to take on if you dont pay back the loan, such as your home or car.
In addition, youll also want to check out the reporting and financial requirements in your contract, which will show what sort of business youre running. If you dont meet these requirements, your lender may recall your loan.
If you need help navigating these terms, talk to an experienced attorney who understands loans. They can help you avoid any unpleasant surprises down the road. They can also help you get the best possible deal on your loan.
2. Keep a Checklist of Loan Documents
One of the best ways to speed up your loan application process is to keep good records. This includes making sure that your business keeps track of the proper paperwork and ensuring that you keep personal copies of the most important documents.
If you have a large amount of information to manage, consider hiring a specialized document management firm that will help you keep everything organized and accurate. This will make the entire loan process go faster and smoother for you and your family.
Keeping a checklist of all the pertinent documents is also a good idea, so you dont have to sift through multiple folders and boxes. The list of required documents will likely be quite long, so youll want to keep a master folder for each type of document.
The aforementioned commercial loan documentation list is a must have, especially if you plan on taking out any sort of real estate or SBA related financing. This list is by no means exhaustive, but it does give you a head start in the competitive lending game. Its a good idea to start compiling your docs around 3 to 6 months before you need them, so you can plan accordingly and avoid the pitfalls that come with scrambling for crucial paper work.
3. Make Your Payments on Time
Whether youre applying for a mortgage, car loan or some other type of loan, making your payments on time is one of the most important things you can do to raise your credit score. In fact, according to FICO and VantageScore, a persons payment history is the most influential factor in determining their credit score.
To help ensure you make your payments on time, its a good idea to keep a checklist of your bills. List them in the order they typically get paid and keep a close eye on when the due dates are. If you cant make a payment before the due date, contact the lender and see if they can be changed.
Another way to make sure youre making your payments on time is to carve out a specific time on your calendar to pay your bills. Taking the time to do this can be very helpful because it will help you create a habit that makes it easier to remember when your bills are due.
As a bonus, being consistent about your bill payments will help your credit score and can make it easier for you to take out new loans in the future. This is because lenders want to see that youre able to manage your finances and pay off debt on a timely basis.
Finally, if you have a high credit balance on your credit cards, make multiple payments during the billing cycle instead of just paying it off when its due. This can help you pay off your balance faster and reduce your credit utilization ratio. In addition, it can also help you lower your interest charges.
4. Dont Make Any Big Purchases Around the Time of Your Application
One of the most important aspects of your credit application is ensuring your credit score remains in tip top shape. You can do this by keeping an eye on your credit card balances, making sure any new loans you open are repaid on time and avoiding making any big purchases around the time of your application. The best way to do this is to set a budget and stick to it. This will ensure youre less likely to get dinged for a late fee or slapped with a higher interest rate.