If you are looking to get a personal loan, it is important to take a proactive approach to finding the best possible deal. Do not let yourself got locked into bad terms if you can avoid it. People who take the first loan offer they get often end up paying higher interest rates and/or fees than they might have if they had shopped around more.
Know Your FICO
The free credit reports that U.S. citizens are entitled to by law don’t contain the FICO score that lenders use to determine your credit worthiness. Order a copy of all three credit reports with FICO scores from a reputable online vendor. People with an FICO score of 700 or above should be eligible for the best possible interest rate available, people with an FICO score below 600 are considered higher risk and may have to go to a lender who specializes in bad credit loans.
Check Your Reports
Examine your credit reports for any misinformation such as accounts that are not yours or negative items that should be removed. Dispute these items and have them removed before you start applying for a personal loan. Even point you can raise your FICO score helps lower the interest rate you will get on your loan.
Inquire Before You Apply
Talk to loan specialists and give them enough information to get an idea of what type of loan you might be eligible before they pull your credit report. Every inquiry into your credit reports negatively affects your score. Do as much loan comparison as you can without having your credit checked multiple times.
Keep Accurate Records
Loan terms may change from your initial consultation with a loan officer to the time you actually see the terms and conditions of the loan. Keep a record of everyone you speak with and notes about what they tell you. You may find that you don’t want to take the offer you’ve received and would to go back and talk to someone you spoke to previously. Just because you receive an offer for a loan doesn’t mean you have to accept it.
Calculate your monthly budget and free up as much money as you can to make your loan payment. The shorter your repayment terms are, the more money you will save on interest you pay over the life of the loan. Lenders also often lower interest rates on short-term loans because they don’t have to worry about inflation. Avoid loans that offer pre-payment penalties. If you can pay extra on your loan every month and reduce the interest you pay, your loan will be an even better bargain.
Taking out a personal loan is not something to do hastily. Gather your facts and speak with different financial institutions about what they can offer you. If you research your options diligently, you will be far more pleased when you sign your loan agreement.
About the Author: Tony S. is a writer, blogger, and graphic designer. He enjoys writing about a wide variety of niches including credit and finance. He occasionally contributes content to CreditLoan.com.