People might need loans for various things. For example, according to Today’s Homeowner, 55% of homeowners said they renovated their home in the past year. That’ll help them raise the price when they put it on the market. However, it could be a problem for those who want to buy it since they might not be able to get a home loan for it. The same goes for an auto loan. Your financial situation could play a big part in that denial. Here’s why!
Did You Make Any Errors on the Application?
You need to be precise when you’re filling out your application. Don’t make any mistakes, because the lenders may not even give you a second chance to fix it. It’s important enough that you should even have a second pair of eyes to take a look at it, like your spouse, to ensure that you input everything correctly. That way, you’ll know that you did everything right. This can improve your chances of getting the loan approved, and if it isn’t, it’s not due to that error.
Are Your Payments on Time?
One of the things that any home loan or auto loan will do is look at your credit score. That means you want to have a good one. How can you do that? For example, 35% of your credit score depends on how promptly you pay your bills. This includes credit cards, student loans, current car payments, and so on. Stay on top of those things and you should greatly improve your chances of getting a home or auto loan.
Is Your Credit History Lengthy Enough?
There’s having a bad credit history and then there’s not having enough credit history. Lenders don’t like this because they won’t be able to use it to gauge whether or not you’ll be able to pay off any debt. So, you either need to build that credit history or see if you can get someone to apply alongside you, like your spouse. Then you can see if the lenders are willing to come back to the table with you.
Do You Have Too Much Debt?
While you need to spend some money to make money, if you fall too far behind in payments, your debt ratio could really hurt your chances of getting a loan. The lenders aren’t going to like that you already owe other entities so much money, so they aren’t going to take the chance of you falling behind on payments to them, too. Work on paying off those other debts first and then see about asking for a loan. Otherwise, you also risk having too many credit report inquiries in a short amount of time.
Another thing to keep in mind is paying taxes on anything you buy or sell. That could affect your ability to buy something even with a loan. For example, according to the New Jersey State Treasury, New Jersey assesses a 6.625% sales tax on sales of most tangible personal property, specified digital products, and certain services unless specifically exempt under New Jersey law.
Are You Underutilizing Proper Technology?
It can feel discouraging to not be able to get a loan for a home or auto at first. You need to take a close look at your finances and see what you’re spending your money on. There are an abundance of apps and websites that could help you get your finances back in order so you can move forward with buying that home or car of your dreams. Consider the credit karma app to keep track of your credit score without taking a hit on it!
You could even use the services of a financial advisor to get back on track. They could help you come up with a spending plan. Then you could eventually be able to apply for these loans and be confident that you’ll be approved for them.
