Admit it. When borrowing money, you pay attention to the name of the lender. As much as possible, you want to know everything about the lending company and take customer reviews seriously. After all, you will be sharing your personal details and you want to make sure that your information is secured.
Believe it or not, lenders make the same profiling like you do. This is why they ask you to submit documents like payslip and proof of billing to ensure that the applicant is a real person. Lenders take credit history seriously as well; hence making it an important consideration on whether or not they will approve your loan.
In other words, lenders want to extend credit to good borrowers.
What makes a good borrower? Here's what:
1) You get the right and appropriate loan.
There are tons of loan facilities available in the market. Still, this doesn't mean you should avail them all.
A good borrower gets the appropriate loan according to your needs. This means if you need additional funds for your home renovation, then you will get a Housing Loan and not a Business Loan.
Keep in mind that each loan facility comes with different features. For instance, you will find housing loan interest higher than a car loan. Choose one that best fits your need and don't get a loan just for the sake of applying.
2) You borrow what you can pay.
It's tempting to apply for the maximum amount since you "might need the funds in the future." How long exactly does this "future" mean?
A good borrower will only borrow an amount that he can pay at ease. If you always aim for the maximum amount, then you might have trouble paying for the loan come due date.
3) You are aware of your financial standing.
There's no one who knows you better than yourself. Before you borrow, make sure you are fully aware of how much money you have as well as any existing loans you owe and their corresponding amounts. This way, you can check whether or not you can still accommodate a new loan.
Do not borrow money especially when past loans are already piling. This is not a characteristic of a good borrower.
4) You are honest.
Lenders don't like it when borrowers indicate false information in their application form. Believe it or not, they will have a way of finding out the truth.
When applying for a loan, make sure you indicate nothing but truthful information about yourself. Do not (attempt to) hide existing loans and past due accounts because lenders will learn about it anyway. A good borrower is truthful and honest, so be one.
5) You understand the loan you are applying for.
One of the most common mistakes committed by Filipinos is that they don't fully understand the loan they are applying for. Worse, instead of asking questions, they just accept whatever the lender is saying and be surprised some due date. Don't be one of them.
A good borrower understands the loan being applied for. Doing so will reduce confusion when the lender charges you with something. More importantly, don't be afraid to ask questions or seek clarifications. It's not a sign of weakness.
6) You pay your bills on time.
This is important.
Keep in mind that lenders pay attention to credit score seriously. One missed payment, even if it's just for one day, could create a not-so-good effect on your credit history.
Therefore, a good borrower pays the loan on time and in full (if necessary), whatever it takes. This shows lenders that you take your financial obligations seriously and proves that you are a responsible borrower.
What if you can't pay on time? Inform your lender immediately so you can come up with a repayment solution without compromising your credit standing. Loan Ranger offers this kind of option in case you won't be able to pay on time (with valid reason, of course).
That being said, are you a good borrower?