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Evaluate Your Financial Status The first step in securing a loan during a credit crunch is to honestly take stock of your financial status at this time. You must have a stable job with adequate income to afford the price of the car or home you want to purchase. A lender will be looking for proof that you can afford the overall cost of the loan, so be ready to demonstrate that your current employment is stable and you have a good track record of working in the past. One option is to go for a lower priced car or home in order to prove beyond a doubt that you can afford it on your current income. If you have your heart set on a higher priced item and do not want to settle, then be prepared to prove your stability and income. If you do not already know your FICA score, find it out before filling out a loan application. A stable job with adequate income backed by a high credit score is the best bet for securing a loan right now. The more you can improve this score before applying for the loan, the better. Prepare To Apply Securing a loan during a credit crunch requires a little preparation before going into negotiations with lenders. Once you know your credit rating and all of the flaws on your credit report, it is time to look at some things you can do to make yourself more attractive to a lender. Lenders like to see unused credit on a report, so if you can pay off credit cards with high balances and not charge anything else on them you can start to improve your credit rating in a short period of time. If you have charge cards you don't normally use such as department store cards, do not close those accounts. The fact that you have those credit lines available but have not used them is a sign of security and confidence in the eyes of a lender. Start living off your actual income and do not put any further debt on credit cards. Keep your credit card balances as free as possible and make all of your payments promptly. A late payment here and there might not have been a big deal a year ago, but it is a huge deal in a credit crunch. You do not need perfect credit to find a loan in this market, but you do need to show positive signs that you make your payments on time and can afford to make a large ticket purchase. If you do not have a great credit rating, there is always the option of cold hard cash. If you can present a sizable down payment a lender will be more likely to take you on. Actually, a down payment of thirty percent or more could actually give you prime rates. Securing a loan during a credit crunch is not impossible. You just have to be prepared to prove your means to pay up in the future. |
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