There comes a time in our lives when we find ourselves in need of a loan. It may be that you need a personal loan, or a flexible loan. For most people the first port of call is their bank.
Our bank is one important part of our financial lives. It makes sense that they would be the first place we go when we need some credit help. They already have a picture of our finances. Even though there is already an existing relationship with the bank, there is still a process when you apply for a loan.
Michael Rollins, a marketing manager for CreditCube, online direct lender, says that while each bank has its own individual process, there are several similarities between them. He said, “There is almost a step by step guide you can follow, regardless of which bank you are approaching for a loan.”
Step One – Organize Your Credit Report
Before you approach for bank for any kind of loan application, you should check your credit report. You can request a free copy of your report per year from each of the three credit bureaus. Once you receive your copy, carefully go through it for errors, and negative transactions. If there are any mistakes, you will need to dispute them with the credit bureau.
Step Two – Check Your Credit Score
A credit score of 640 or higher is considered above average. A score like this should mean that you wouldn’t have any problem getting a loan from your bank. If your score is lower than you may have more issues or be subject to a higher interest rate. You can improve your credit score. You can make sure that any payday loans are fully paid off, and make sure that your debt to credit ratio is in good standing.
Step Three – Organize Your Income
If you have stable employment, you should organize your pay stubs, and bank statements as they will be needed for the loan application. If you don’t have a stable income, you should try to show that you have a good financial history, and a record of paying back debt.
Step Four – Choose Your Loan
When you’re choosing the kind of loan you’re going to apply for, there are several factors you need to consider. First, you need to think about what you’re using the loan for. You’ll also need to think about your personal finances and spending habits. This will help to determine if a personal loan, installment loan or flexible loan is best suited to your needs.
Step Five – Choose Your Lender
If you’re applying for a loan with an indirect lender, or with an online loan lender, then you can make several applications to a few companies within a thirty day period. This should be viewed as a single application on your credit record, and be viewed as ‘shopping around’. However, several applications to banks may not be seen the same way, so you should choose one bank, and make one application.
Step Six – Apply
The bank will have their own application process for you to follow, but you should expect to be asked for bank statements, proof of income, proof of ID, proof of address, and tax documents. You will probably be asked to include copies of these with your application.
Each bank will also have their own time period for letting you know about your application. If you have been rejected for a loan, or if you have a poor credit history, there are still loan options available to you. You can approach direct lenders, and alternative loan lenders, who could be in a better position to help you. You can also try to improve your credit rating and reapply when you have a better score.
If you are successful, remember that you need to make your payments on time. Late payments, and missed payments are recorded in your credit report, so you will need to stay on top of them. If you do run in difficulty in repaying the loan, you should contact the lender as soon as possible. Most lenders will be willing to discuss potential options that can make things easier for you until you’re back on your feet.
Essentially, when you’re applying for a bank loan, you need to be organized. You’re probably going to need a good credit report, and credit score, or you may need some sort of asset, such as your home, to secure a loan. Many people find that a bank loan is simply too difficult to secure, and in these cases, online loan lenders can be a much more sensible way to secure the funds that you need.
