Before submitting an application for personal loans in Amarillo, Texas, the first thing you need to do is obtain copies of your free annual credit reports from the major credit reporting agencies. You want to make sure your credit history is accurate and correct, and that it does not contain any errors. If you notice errors, there are specific processes you can use to file a dispute.
Getting disputes resolved can take several months, but that does not mean you have to wait to apply for your loan. It just lets you know what is on your credit history so you can inform potential lenders of any errors and the steps you are taking to get the matter resolved. It also does not hurt to get your credit score from the major agencies.
Most lenders use your credit score to determine how much of a risk you are, along with reviewing your credit history. The credit scoring method used does vary from one agency to the next. However, a good guideline to use is:
- Below 640 – Poor Credit
- 640 – 700 – Fair Credit
- 700 – 760 – Good Credit
- Above 760 – Excellent Credit
If your credit score is on the border line, it can be beneficial to attempt to increase your score before applying for a personal loan. For instance, if your score is currently 690, pushing it up to at least 700 can make a difference in the interest rates lenders offer.
You will also need to demonstrate a method of repayment for the loan. For most people this is their income from their employer. If you are self-employed or retired, you will need to provide documentation showing your monthly earnings to show you have the means to repay the loan. In addition, lenders may ask about your current financial obligations to determine your debt-to-income ratio and use this in their decision making process.
Next, determine the amount of money you would like to borrow and why you need it. Only request the amount needed, and avoid asking for more than is required. You also need to decide whether a secured or unsecured loan is best for your needs.
A secured loan is a loan that is backed by some form of collateral. Auto loans and mortgages are two of the more common secured loans. An unsecured loan is also known as a signature loan. With this type of loan you simply sign the loan contract and agree to repay the lender without having to provide any form of collateral.
Keep in mind, based upon the amount requested, it is sometimes harder to get approved for an unsecured loan compared to a secured loan. Further, you should avoid submitting multiple loan applications at the same time, as numerous credit inquiries can hurt your credit score.
Lastly, apply for loans at reputable lenders in your area, like credit unions. For more information about personal loans, and to see if you qualify, contact The People’s Federal Credit Union at (800) 234-9335.