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Wednesday, July 29, 2009

Do Loan Applications Make You Nervous? These Ideas Show You How the Credit Manager Thinks

When you submit your loan application the bank's credit officer looks at it. If you know what they are looking for you can increase your chances of the loan being approved at the lowest rate. Here, the issue of loan shoppers and your existing loan payment pattern of debt are discussed.

Recognize that banks can also say no. Two issued that banks look at for deciding your risk profile and that determines if you will get a loan or not and at what rate. Shoppers and missed or late payment fees are discussed here.

- Loan shoppers
- Payment pattern Shopping

For an average householder who wants to get a loan. They go into a number of banks and non bank lenders to fill out applications and talk to people, looking for the best deal. They do not really want a loan at this stage, they are just shopping. After a while they get the picture of what is available and who has the best rate etc and that is when they become serious.

They complete the loan application and submit it. The first thing the bank does is do a credit check. They find that you have been shopping around. Each application and serious inquiry for mortgage, credit cards, personal loans etc are all listed on your credit report. You can be tracked on your hunt for the best deal.

Lenders do not like this. The attitude is that you will always be a shopper and this makes the bank nervous that thy wont have stability with you. Here today, gone tomorrow. Banks take a couple of years before a loan is really profitable. A shopper is a threat to the bank The bank recognizes that the applicant who is looking in the short term for an other opportunity and changes to another loan is a risk since the bank would lose money on this applicant. The bank has an attitude where if they can clearly identify a shopper why write the loan.

Some people say I can do it just as good analysis as a Mortgage Broker. That may be true but you mess up your credit rating in the process. Counter productive.

It is not uncommon after an application has been through the credit department in the approval process to send out the following question to the potential borrower. Can we have an explanation as to why they have been to Bank A, Bank B, Bank C, Bank D Bank E? To say the borrower does not get a shock is an understatement.

How to avoid this.

Go to a Mortgage Broker. They have access to many banks and lending institutions. They know all the deals and where to obtain the best deals for you.

So once you have chosen your loan you make an application. You are not seen as a shopper. Even if you have canvassed every option available to you!

Payment Pattern

When you make an application for a loan you are generally asked to submit your:

- Mortgage Loan statements.
- Credit cards statements
- Personal loan statements.
- Car loan statements.
- Store cards statements.

You photocopy them and send them in with the application. The first thing a bank undertakes is a credit check and puts that on your file. The bank then analyzes each statement. What they are looking for is:

- Late payment fees,
- Missed payments.

This is very important as it shows your level of responsibility towards taking on a commitment.This is grounds for providing or not providing you credit.If you are thinking of a loan you must follows these steps:

- Check all your statements before you make an application.
- Ensure that none of your credit statements have any late payments/ missed payment.
- If it is a loan you require you should have a minimum of 3 and best 6 month of clean statements. 12 Months for Mortgages.

How to get around the problem. You may have a missed payment late payments on your statements and you cannot wait the six months for the loan. Get a personal loan and consolidate the credit cards and loan. Cancel the credit cards.

Next make an application and as you do not have the credit cards you do not have to declare them. Make sure that you keep your loan payment on time and then make the application.

Contact a mortgage broker to assist you in the process of making a loan application.


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