Before you attempt to take out a loan, be sure you’ve set aside money for down payments and closing costs. Your lender will check to make sure your funds are sufficient. Unfortunately, cash kept in a shoe box in your closet doesn’t count; be sure your funds reside in a checking or savings account.
Also be sure to check for any inaccuracies on your credit report. Disputing and fixing these mistakes usually takes 30 days or more, so save yourself time and start reviewing your credit report as soon as possible.
As far as credit score, if yours is too low to receive loan approval, there are steps you can take to try to increase it. Below are a few suggestions from our lending team:
- Pay all your bills on time. Make at least the minimum payment on credit cards and loans.
- Make sure you have a variety of both installment debt and revolving debt. Installment debt refers to loans such as car loans in which you pay the loan down each month until it's paid off. Examples of revolving debt would include credit cards and home equity lines of credit, where you can continue to charge and make payments. Revolving debt tends to help your credit score even more, as long as you use it responsibly.
- Use your credit cards but never max them out. Only charge up to 65% of the maximum amount allowed by your credit card company.
- Pay off your credit cards each month. Try to use your credit cards for things you’re going to buy anyway, such as gas and groceries. Then pay them off each month.
Tip: Do not attempt to close all your credit cards before coming in to take out a loan. This can actually hurt your credit score.
While these recommendations and tips often work well for our customers, there are cases where their credit scores still do not increase and they do not receive loan approval. While this is usually not the case, we must be clear that we cannot guarantee you’ll receive approval despite taking the actions recommended above.
For more ideas and details about how to increase your chances of loan approval, stop in to any of our western Kansas locations and speak with a lender today.
Western State Bank is an equal housing lender. Member FDIC.