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Applying for Credit?

By: Deborah McNaughton

Applying for credit can be overwhelming. Whatever type of credit you need, whether you need an auto loan, mortgage, credit card or line of credit, always be prepared and do your research. As an informed consumer, you can avoid credit denials and save money by finding the best credit to meet your needs.

1. Get a copy of your credit report first. Potential creditors and lenders will be looking at your credit report, so why shouldn’t you look first? It’s always a good idea to know what is on your credit report.
There is nothing worse than being surprised when a lender denies your application because of an item on your credit report that you were unaware of.

To order a copy of your credit report, contact the three major credit reporting agencies, TransUnion, Equifax and Experian. It is recommended that you get a copy of your report, with credit score, from each agency.

Under the Fair and Accurate Credit Transactions Act, each consumer is entitled to one free credit report a year from each of the three major credit reporting agencies. For information on how to obtain your report call, 877-322-8228.

Show your report to a potential lender before you sign an application. The lender will be able to tell you based on your report whether it thinks you will qualify or not. If the lender states that you will not qualify, you have saved an inquiry on your credit report. If the lender states that you will qualify, then go ahead and authorize the lender to run a new report.

2. Interview the creditor before you apply for credit. Before you enter into any type of credit agreement with a bank or financial institution, there are some questions that you need to have answered.

If you are applying for a credit card, you should inquire about the annual percentage rate (the cost of using the bank’s money), how interest is calculated and the grace period. It is also important to know what types of fees are charged and the amounts. For example, is there an annual fee? What are the fees if there are late payments or if you are over the limit? Don’t hesitate to ask these questions in advance. It’s better to know as much information as possible up front.

If you are applying for a mortgage, you should find out what interest rate you will be charged and if the rate is fixed or variable. Also ask questions about costs associated with getting the loan. Are any of the fees negotiable? Sometimes there are penalties that you will be charged if you pay off the loan early, also known as pre-payment penalties, so be sure to ask.

3. Read the disclosures and fine print. Have you ever flipped a credit application over and noticed all the fine print? Read it. This fine print will disclose the details of the credit you are applying for. If you are applying for an auto loan or mortgage, there will be many documents that disclose information regarding your loan. Take your time to read these disclosures.

4. Determine which creditor or lender is right for you. Contact several creditors before you apply for credit. Once you have asked your questions and reviewed the disclosures, you will be able to determine which program is best for you. Compare interest rates, fees and other costs associated with the credit. Choose the one that will save you the most money.

Article Source: http://www.articlesinsight.com

Deborah McNaughton is an author and credit expert. She is founder of Financial Victory Institute, which specializes in financial education. Deborah has programs to train individuals to become credit consultants and teach financial seminars. Visit www.financialvictory.com or call 714-993-1171.

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