Weekly Financial Advice Column
In the midst of economic concerns, banks are becoming more reluctant to issue loans. Lending institutions take several factors into account when deciding whether or not to grant an applicant a loan and in determining what interest rate will be available. These factors include the applicant’s net worth, current salary, outstanding debt, credit history, and credit score. Here are some tips to get you started on improving your chances of being approved for a loan.
First, check for errors in your credit history annually, or more frequently, by requesting a copy of your credit report from one of the credit reporting agencies. This allows you to verify that all of the data is accurate. If someone has fraudulently acquired a line of credit using your name, you should call your local police department right away.
Second, demonstrate your reliability by making all of your loan and credit card payments on time. A long history of responsible credit use is very attractive to lenders. Also, if you have a large amount of consumer debt, consider paying some of it off before applying for a loan.
Third, use credit cards sparingly and with caution. Carefully read your credit card agreement and make sure you fully understand the terms. Many cards come with hefty penalties or a sharp rise in interest rates when a late payment occurs.
Finally, while it’s beneficial to keep little to no debt on your credit cards, it’s not the best idea to close all of your accounts. If you have a long history with a card, it is advised to keep that particular account open and in good standing. If you do opt to cut down on the number of cards you have, do not close them simultaneously, as lenders may perceive this as an indication of financial distress. | 
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