Applying for your first loan can be daunting, since there are many things to know. This guide is intended to help you understand how to apply and what to do if you are not approved.
How's Your Credit?
You may be surprised to learn that in order to get your first loan, you might need to already have some credit established. This is especially true if the loan is several thousand dollars or more.
When you put in your loan application, the banks will check your credit score. They will also take other factors into account, including your amount of savings, your salary, and what the loan is for. The specialist will then make a risk assessment to determine whether making the loan is a good idea or not.
Thus, if you have some time between now and when you absolutely need the money, it could be a smart idea to get a credit card so that you can make small purchases every month. Then, you will pay these off, and your paying the money back will appear on your credit report. This is a way to establish yourself as someone who pays back debts on time.
What If You Don't Qualify?
If you don't qualify for a loan for the amount that you requested, there are a few things to try. For one, there's always the possibility that you would qualify for a lower dollar amount if you wish to reapply. You could also look for a cosigner to vouch for you.
Aside from this, there are many great alternative lending programs that can set their own criteria for giving out personal loans. If you have some collateral to offer but have limited credit, a private lender might loan you the money based on your collateral. Peer-to-peer lenders are another option to look into, since each individual lender can decide who to loan money to. If you have a compelling reason, you might be picked over other potential candidates with a better credit score.
If the money is designed to get you through a tough spot, then consider something like a payday loan. The short repayment terms and higher interest rates make it more likely for a person to be approved despite their credit situation. The bottom line is that getting a loan for your first time may take some creativity, but there are many sources to approach in your endeavor.
Talk to a company such as Juniata Valley Bank to learn more.