Do you wish you could change the architectural design of your home to make it stand out in your neighborhood? So why haven’t you contacted a renovation company and signed a contract to start the project? For most of us, the reason is money.
Luckily, financial institutions can support your projects with home improvement loans. Just like other loans, you will be required to repay the loan within the agreed timeframe and as per the terms and conditions. Note that repaying the loan on time will increase your credit score rating thereby making it easy for you to get other loans in the future.
There is 1 question that you need to ask yourself before applying: “am I qualified for a home improvement loan?” Here is a guide to help you understand how to get qualified, and we will look at some of the things that can result in your loan application being denied by the lender.
What Is Your Current Credit Score Rating?
Banks and individual lenders use credit score ratings to determine one’s ability to repay a loan on time. A recognized credit bureau provides your credit report that details your borrowing behavior. The higher your credit score, the higher your chances of getting a home improvement loan.
Before you apply for this kind of a loan, it is recommended to ask for this report to know your current standing. Go through the report to verify that all the information is accurate, as errors can paint a negative image to the lender. For instance, check if the bank accounts listed are yours and the amount owed on each of them is correct.
Some of the guaranteed ways of improving your credit score are:
- Repay your loans on time
- Pay your bills on time
- Maintain a low utilization rate
- Eliminate credit card balances
- Leave old debt (that you have paid off) on your report
What Are Your Limitations?
Again, the bank or any other financial institution that you intend to approach for a loan will use your credit history and current score to understand if they can fulfill your financial request.
Only request an amount that you can comfortably repay without plunging your family into financial turmoil. As mentioned earlier, failing to make the monthly repayments on time can hurt your credit score. Lending professionals can help you interpret the report and know your limitations. The sooner you start your communications with a lender, the better your chances to make a smart financial decision.
Understand Your Preferences
Thankfully, there are hundreds of financial institutions that offer home improvement loans. Use the internet to find the best loan packages. Compare the terms and conditions as well as the interest rates to find the one that best suits your needs and budgets. Don’t rush your decision. Take time to evaluate the options available before making your final lending decision.
What Are Your Expectations?
Have a list of expectations of your financial institution for the loan. You can create these with simple searches of the competition. Organize a meeting with the bank to get a clear perspective of the loan application and approval process. During the consultation session, ask questions based on your meeting and research to get a full understanding of the loan agreement before you sign the documents.
For instance, some loans can be pre-approved, but the specific details of the loan may not be made available until a few weeks have passed. Ask what you should expect from the time you submit your application to its review. The loan officer will also ask you questions on your intention for the money and your repayment plan. Make sure that you answer all the questions truthfully to increase the chances of your application being approved. Note that any discrepancies can result in the application being rejected.
Take Notes and Have a Checklist
Take notes during the consultation session, but don’t let them stop you from listening. They are meant to help jog your memory about the questions you wanted to ask while they were speaking.
You should also go in armed with a list of questions and checklist of topics you know you have to cover. Don’t make these at the last second either. The more time you take to develop a list of questions and topics, the more you are going to know before you sign those papers.
Conclusion
The question of qualification goes beyond a simple signing of papers for some money. It’s a full-picture process that is determined by an array of factors, and some of them are beyond your control. The best way to become the picture of the perfectly qualified candidate you want to be is to take care of the parts you can control.
You can look into your credit score, you can have a budget plan, you can control how much the project will cost, you can take the time to understand how loans work and the loan market competition, and you can take notes before and during your conversation to help you remember each and every step.
You can do it, you can qualify.
