Some Loan Application Tips

When applying for a loan, one may face the dilemma of determining just how much money one intends to borrow. Applying for a loan is an act that needed planning. It is never done spontaneously.

One of the preparations that a loan applicant must do is to determine just how much he intends to borrow from the lending company. In determining how much a loan applicant must borrow, here are some ideas that will be helpful.

Budgeting Wisely

To budget wisely is not just about doing the math right or choosing the best deals. Budgeting wisely involves knowing the purpose of the personal loan. The purpose of the loan will give an idea about what will be the expenses that will be encountered. And once the borrower is aware of all the expenses that he will be facing, he can borrow enough funds for it. Borrowing money which is less than what is needed has no effect at all.

For example, a person needed £10,000 for a trip. If he borrows only three quarters of it, £7,500, then he will never be able to conduct the trip. The insufficient loaned amount will go to another purpose which is other than the trip. Therefore, the borrower must draw up a budget before applying for a loan.

If the personal loan is for taking the family to a holiday vacation, then the borrower must budget the travelling expenses such as the airfare (or train or bus or boat). Then, he should include other related expenses such as travel insurance, car rental, hotel accommodations, communication expenses, food expenses, and money to spend in buying souvenirs.

Borrow Extra Money for Unexpected Events

After the borrower has budgeted appropriately, he should think about borrowing extra money. The extra amount will be for expenses that are unexpected or unforeseen. This is because no matter how intensive the budgeting is, there will situations that bring about more expenses.

For example, a borrower applied for a loan which is intended for making home improvements, such as constructing an additional room. But during the period of construction, the borrower realizes that the prices of construction materials were underestimated. This will seriously affect the home improvement. Then, the borrower will also find aspects in the house that needed to be fixed. This will entail expenses.

Borrow Extra Money to Save Money

This loan application tip sounds contradictory. But the borrower must realize that loans for smaller amounts are charged with higher interest rates. The loans for larger amounts are charged with lower interest rates. But should the person do with the extra money. This extra money should be saved in a savings account with high interests. This will help the borrower pay off the large loan.

You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:

About The Author

John Mussi is the founder of UK Personal Secured Loans who help homeowners find the best available loans via the http://www.uk-personal-secured-loans.com website.

[tags]loan, loan application[/tags]

What You Can Do To Improve Your Credit Score

It is hard to watch television these days without hearing about credit scores. If you are not looking to get a loan or credit card, you may be wandering whether or not they are important. Your credit score is important, regardless of whether or not you plan on applying for a credit card or loan. In this article I will explain what a credit score is and why it is important.

What Is A Credit Score?

Your credit score will determine whether or not you'll be approved for a mortgage loan, and how high your interest rate will be. Your credit score will also determine the cost of your car insurance. Even certain jobs, which you apply for, will require you to have good credit. Having a low score will make things much more expensive, and you may find that some companies won't hire you. The easiest way to get a good score is to make sure you're responsible with making your payments on time. It is also important to understand what is used to calculate the score.

Calculating Your Total

The type of different loans you have makes up about 10% of the score. If you don't have an established credit history, the number of different accounts you have will be considered. Your payment history makes up 35% of your credit score. The number of different accounts you make payments on is considered, as well as number of late or missed payments you have. Any liens, bankruptcies, or judgments will be reviewed, and this information will be used to factor in your score. Services such as furniture rentals and car loans are included as well as credit cards.

The total amount owed makes up about 30% of your credit score. The number of accounts you have and the amounts you owe on all of them are reviewed. The closer you are to maximizing out your loans, the more likely it is that your credit score will be lower. How much you have paid back on your loans is also taken into consideration. The age of your credit history makes up about 15% of your credit score. If you have a long credit history your score will be higher if you don't have any negative marks in the past. The last factor that makes up your credit score is called new credit.

New Agreements

New credit refers to the number of new loans you have opened recently, and makes up about 10% of your credit score. The number of request you've made for credit cards or loans is also computed. Now that you know all of the things that are used to calculate your score, what can you do to improve it?

What You Can Do To Improve

One of the things you can do is make sure all of your bills are paid on time. If you are too busy to make sure your bills are paid on time, set up automatic payments so that the money is debited from your account on the day it is due. You also want to make sure you don't open too many accounts within a short period of time. It is also important to keep your balance low in proportion to the total amount of credit available on the loan. You should owe 25% less than the total available credit on your loan or credit card.

It is also better to pay off your credit card instead of moving over the balance to a card that has a lower interest rate. Constantly moving around your balances can cause your score to become lower, because the total amount you owe could fluctuate if you close certain accounts.

Joe Kenny writes for the credit card comparison and information site http://www.cardguide.co.uk, visit them today for more credit card articles.

[tags]credit, score, calculate, help, improve, rating, check, loan, cards, agreement, companies[/tags]