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Wednesday, August 17, 2022

5 ways to boost your borrowing power


Whether you are borrowing money for a house, car, furniture, or just a holiday abroad, you want to make sure you get your application through. This means knowing how much you can realistically borrow and being able to back up your claim. Here are five tips for maximising your lending capacity and improving your chances of being approved.

1. Compare lenders

Browsing and comparing a variety of lenders will help you choose one that is more likely to go through with your loan. Factors to consider include the types of loans they specialise in, how well established the organisation is, and what kind of reputation they have in regards to approving loans.

Most leading lenders, such as Heritage Bank, provide useful tools like a personal loan calculator on their websites, so you can do some of your research and comparing quite easily online. Take advantage of such resources and get as much information as possible before approaching the institutions that stand out based on your findings.

2. Update your records regularly

Outdated records can unnecessarily restrict your borrowing power, especially if your income today is more stable or lucrative than your latest records indicate. Keep your finances up to date so potential lenders can get a full and accurate picture of your circumstances and a sense that you have this aspect of your life under control.

3. Take care of existing credit issues

If you have any damaging debts or outstanding credit problems, it is obviously ideal to remedy these before applying for your loan. However, there are some less well-known things you can do in this area to potentially boost your borrowing power. If you have any unused credit cards, cancel them. If any of them have limits higher than you require, reduce these limits. These two steps can reduce the liability of your credit cards in the eyes of the lender.

4. Split expenses with your partner or ex

If you can show that your current partner or ex-partner is able to financially support your children without your input, expenses related to your kids can potentially be removed from your loan application. This should enable you to reach higher and secure a more significant loan amount.

5. Be organised in your application and your interview

At the end of the day, the lender wants to know if you are an honest individual worthy of their trust. Having evidence supporting that you fit the bill is important – and so is making sure this evidence is easy for you and them to access. Prepare your application in a logical way and understand what kind of supporting documents you will be asked to discuss in your interview. It also does not hurt to present yourself neatly and professionally when you talk to your lender’s representative in person.

Nobody wants to walk away from a loan application disappointed. Any combination of these tips could potentially give you the edge to take your borrowing power over the line. If you have any additional suggestions or past experiences that could be helpful to other readers, do not hesitate to share them in the comments below.