Aim for the right lender
When applying for a loan, many people are disappointed to find that the low interest rate they saw advertised is not what they are offered. Or, even worse, their application is declined, which negatively affects their credit record.
That is why you should never just apply for a loan because it has an attractive interest rate. You need to aim for the right lender. And in some cases, the right lender could be right under your nose – ie. your local bank!
Many people apply for a loan they see advertised on the TV or internet and think that they will get it because their credit rating is good. They think that their rating is ‘good’ because they have never been late with payments nor missed any. However, while these are plus points on a person’s credit file, there are other factors that affect a credit score.
This is turn will affect whether you are accepted for a loan and, if you are accepted, how much the interest rate will be.
For example, if you are a single person in rented accommodation and have only just started work in the last year or so, your rating will only be ‘average’. This is no matter that you meet all your credit commitments on time.
The ‘ideal’ candidate for a lender is someone who is 46 and has a mortgage, is married with two children and has a clean credit history as well as years’ of full time employment. Being single, fairly new on the employment ladder or still living at home with your parents will affect your credit score.
In instances like this, if you have a bank account, it is worth going to them for a loan. They will be able to see how you manage and run your existing bank account by looking at your history with them.