Short Term Loans: Making Them Work

Your Personal Loan Approval Checklist

For those who've never been through the process before, applying for personal loans might seem intimidating. After all, your financial history, personal income, and employment status all come under scrutiny. This is made worse when the loan is something that you need to achieve a significant goal or to make life better for you and your family.

If you're feeling the pressure as you move into the application process, the best thing you can do is to take matters into your own hands. By performing some simple and effective tasks before you apply, you can help ensure that your application process is smooth, efficient, and successful.

Item #1--Check Your Credit Score

Depending on the time you've set aside for your application process, you might not be able to influence your credit score too heavily before you begin. That's because the factors that determine your score are long-term historical trends, such as:

  • Payment history
  • Total debt owed
  • Duration of your credit history
  • Creation of new credit accounts
  • Categories of credit used

However, while you cannot possibly alter the course of years worth of financial activity, there are some steps you can take. The most notable action for personal loan applicants is to ensure that the report is accurate. Incorrect reports on your credit history can be dealt with by contacting the creditor who made the report in most cases. At the very least, you will know what to explain to your lender--and what proof to bring to your application meeting.

The other step to take is to pay off any small credit accounts that you can reasonably address. It's likely that you don't have a great deal of discretionary funds--after all, you're applying for a loan. That said, if you can remove any small balances, particularly those that include retail credit lines, your debt picture will look better.

Item #2--Collect Proof of Income

Your lender will want to know your income history. This is particularly vital in situations where you're applying for an unsecured loan. Since unsecured loans do not require any collateral to back the loan, your lender will want assurance that you can make the monthly payments without issue.

You'll want to have payroll stubs from at least the past few months. Also, you'll want to make sure that you have your W-2 form or your most recent tax return available to use during the application. These, when combined with your payroll stubs, should paint a complete picture of your income history.

Item #3--Determine Your Strongest References

If you've ever applied for a job, you know what a reference is on an application. Basically, personal references are supplied so your lender can verify any information that you supply, such as length of time spent at a job or home. Contrary to popular belief, these contacts aren't typically used to verify a person's character or anything of the sort.

That means you'll want to choose the best references for the purpose they'll serve. Employers are a great source for this, since they are required to keep meticulous data about your length of employment, residency, and other similar matters. Family members, on the other hand, are not nearly as strong--since they won't keep documentation of your activities and status.

A final tip on references--no matter who you choose as a reference, ask them for permission before you apply for your loan. You want them to be prepared in the event that they are contacted. You also want them to cooperate fully with the lender, so advance warning is a polite and intelligent choice.

If you take care of these items before you submit your application, you'll be prepared for anything that the loan process can throw at you. While this doesn't mean that you'll always acquire the exact financing that you need, you'll know that you did everything possible to ensure your success.

About Me

Short Term Loans: Making Them Work

People warned me about taking out short-term loans, especially payday loans. What I found is that if I manage them responsibly, they come in very handy. On more than one occasion, these simple loans have helped me out of difficult situations. They took care of emergency car repairs, and provided the cash I needed to pay bills and avoid incurring late fees. I always repaid them on time, and the lender rewarded me by increasing the limit on how much I can borrow. If you are thinking of securing a payday loan, let me tell you what to look for in a lender. I'll also help you understand the commitment that you are assuming. With responsible use, I know you will find these loans as helpful for you as they've been for me.


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