7 Ways to Increase Your Chances of Getting a Bank credit
Do you ever wonder how some people can get access to huge amounts of credit in a short period? Normally, getting credit always takes time and thorough analysis of credit scores.
In case you’re in urgent need of money you can still get instant credit from smaller financial companies online.
However, exercise extra caution when dealing with online financial lenders to prevent yourself from falling for a scam.
Read online financial help reviews to narrow down your options to a more reasonable and legit credit service.
Well, in this article I’ll share some of the things you can improve to increase your chances of getting a bank credit. Let’s have a look;
- Make payments in due time
Banks and financial institutions keep a record of all transactions of credit customers. To better your chances of getting a loan, you must ensure that you are paying all your existing debt on time.
This will go to show the bank that you are a trustworthy customer deserving of credit and that you can repay on time.
Defaulting on loans reduces your credit score and impacts your ability to secure future loans.
It is very hard to get credit after you have defaulted and even if it’s possible, the loaned amount is going to be very low.
After settlement of default, you can still get access to a loan but your credit score will be way low.
The best way to avoid defaulting on loans is to manage your finances well.
Do not spend credit to the limit and ensure what you invest in the loan amount to something that can give back.
Take your time to read accounting tips and other personal finance management tips to avoid the many mistakes people make with their finances.
- Reduce credit utilization rate
The credit utilisation rate is the percentage amount of credit card limit being used.
If two people had a maximum credit card limit of £1500, one of them has a utilisation rate of 80% and the other has a utilisation rate of 30% lenders are more likely to issue more credit to the latter person.
High credit utilisation projects that a person is of high reliance on credit and chances are they might not repay or it will take time before lenders are paid.
- Increase credit limit
Directly related to the credit utilisation rate, increasing your credit limit will mean that you’re lowering your credit utilisation ratio.
How can you increase your credit limit? By reducing your credit utilisation rate. Keeping your credit utilisation rate under 30% will increase your chances of getting a higher credit limit.
Pay down debts, reduce your spending on credit cards, and then request for an increase in credit limit.
With a higher credit limit, lenders are more likely to trust you with further advancement of money.
- Look at your debt to income ratio
Debt to income ratio means the amount of money owed versus the amount of money coming in as income. Lenders tend to look at this ratio to gauge whether or not you can qualify for a loan.
When your debt to income ratio is high that means that most of your income will be going to repaying other debts reducing the income at hand.
You can reduce your debt to income ratio by repaying existing loans before seeking further credit.
- Pay credit with the highest balance first
There’s a direct correlation between existing debt and loan applications. Moneylenders are known to issue loans to people with no outstanding depth or low outstanding.
This does not mean that somebody with existing loans cannot secure further advancements. It is possible but your chances are lower.
Start by paying credit with the highest balance first followed by credits with lower outstanding.
You can also choose to pay credit with the first interest first but whatever strategy you choose to use, stick to it.
- Do not make many loan applications
While it might seem like a reasonable step to send many applications hoping one will go through, multiple loan applications to different lenders will reflect badly on your borrowing habits.
It goes to show that you are in desperate need of finances. It is also a setback on your credit score.
- Provide a collateral
You are highly likely to secure a bank loan if you can furnish collateral as recourse for defaulting.
It is possible to get a loan without collateral however the interest rates may be high or your limit may be way too low.