You know saving is the responsible thing to do, but it’s not always easy when money is tight. Sometimes, it’s impossible to set aside enough cash in an emergency fund by the time your next emergency arrives.
So what do you when your savings fall short? You find credit to help cover your new bills.
The only problem? It’s not always easy getting credit. According to the Federal Reserve, nearly one-quarter of Americans are denied financing.
If you’re worried about your chances of getting approved, keep scrolling. Here are five tips to help boost your application.
1. Check Your Score
Do you know your credit score off by heart? Don’t sweat if you have no idea what it is. You can find out here for free.
Why does this three-digit number matter? Well, many financial institutions use it as a decision-making tool. It helps them decide if they should lend you money.
If your report reveals you have a subprime score, some financial institutions may reject your application. Or they may limit your options and increase the rates you have to pay.
Having a prime score, on the other hand, reduces these rates and increases your options. The difference in these rates may have a significant impact on how affordable your next personal line of credit ends up being.
Knowing your score will help you find a product that works with your finances. This way, you won’t overlook opportunities or waste time apply for something you can’t get.
2. Build History
If you can put your purchase or project on hold, it might be worth waiting to apply until you have a prime score. This may take a few weeks or a few months depending on just how low your score is.
Regardless of your digits, one of the best ways to build up positive history is by paying your bills on time. Your payment history is one of the biggest factors the major scoring models consider when calculating your score.
While it’s the most influential factor, it’s important to remember that your payment history is just one piece of the puzzle. Your score is impacted by many factors, so you need to keep on top of each of them to see the biggest change.
3. Put up Collateral
Not everyone will be able to wait until the timing’s right. Most people face down emergencies that make it imperative they get help as soon as possible.
This may be a challenge with a subprime score, but it’s not impossible. You may have better luck by pursuing a secured personal line of credit. Here, “secured” means you’ve backed your loan with a valuable asset. If you can’t pay it back in time, your lender can take this asset as payment.
4. Get a Cosigner
A secured option only makes sense if you’re willing to stake your loan on something valuable. If you don’t have an asset you’re willing to put up, you may want to consider getting a cosigner to shore up your application.
A cosigner submits their financial information alongside yours during the application process. It’s a way of piggybacking on their finances to help sweeten the deal for a lender. If your cosigner has prime score and other markings of a responsible borrower, you’ll likely have your application approved.
There’s just one caveat. If approved, your cosigner is in your contract as a guarantor. In the event you can’t pay your bills, your cosigner will be responsible for any missed payments.
This is a big thing to ask someone, even if you only ask your closest friends and family. More than a quarter of cosigners say the experience has damaged their relationship, so you’ll only want to choose this option if everyone understands the risks involved.
5. Find the Right Financial Institution
A cosigner may work for some people, but it isn’t always practical. Your family may not be willing or able to help you. But that doesn’t mean credit is off the table in an emergency.
Some unsecured personal lines of credit are available, even if you have a subprime score. Although all financial institutions look at this number when considering your application, each one has its own criteria. Some financial institutions have less red tape than others.
You might have a better chance of getting what you need if you go online. Financial institutions like CreditFresh make it easy to research, rate shop, and request a personal line of credit over the Internet.
An online unsecured personal line of credit acts as a safety net for unexpected expenses and repairs. To find out more about how an online unsecured personal line of credit works, learn about your options from CreditFresh.
With a simple, quick, and completely transparent process, it may be an uncomplicated and fast-acting solution.
Bottom Line: You Have Options!
Finding money under a time crunch may be overwhelming, but don’t let the stress get to you. Research your options carefully. Weighing up the difference between secured and unsecured options, cosigners, and more will help you find more than just money quickly. You’ll be able to find credit that fits your finances, too.