No one cares about your money more than you. You are the one who works hard to earn it. You should be interested in things that save you money. Lowering your interest rates on the credit that you have is one way to say money. The interest rates that the bank offers you are not set in stone. You have control over the interest rates that you have.
If you want to lower your interest rates, you have to understand what the banker (lender) is looking for. Then you can strengthen those areas and give the lender (banker) what they want to see. It is a win-win for both of you. They get to approve a new credit product which counts towards their sales goals and you get the money you were asking for and at the lowest possible interest rate given your current specific individual credit circumstances.
It will take some effort to improve your “approvability” as it just doesn’t happen overnight. Knowing what you need to do though does make it easier. It is worth the effort, I can assure you. The money you save is after tax dollars, so it is more valuable than a raise at work, which is taxed. Something to keep in mind is this: which is easier to get and which is easier to work on – putting in time to get a raise or putting in some time to save some money on interest costs?
Depending on where you are starting from, what you need to do may be a little, or it may be a lot. Either way, who doesn’t want to save money? What would you do if you had extra money this month? Keep that in mind as you are making yourself a better credit approval by giving the banker or lender what they want to see.
To make yourself a better credit approval, you need to increase the strength of the 5C’s of Credit (Character, Capacity, Credit History, Capital, and Collateral) and the 5H’s of Credit (Have you made your payments on time?, How much money do you owe?, How long have you had credit?, How much new credit do you have?, and, How many types of credit do you have?). This is what the banker looks at and uses to determine whether you are approved or not. The stronger these areas are, the better the interest rates you will be offered.
Now that you know what the banker is looking at, how do you make each of these areas stronger and more appealing so that you be approved when you apply for credit. In upcoming blog posts I will discuss ways to strengthen each of these areas and give methods that I have used to get my clients approved for the credit they were asking for. Some methods will take longer to implement and it will take some time to see an effect; the key is to be patient and keep at it. Others will be easily put into place and you will see an immediate effect. For a compounding effect, use multiple strategies to get the best results possible.
What would you do with the extra money you would have if you paid less in interest costs? When you have high interest rates, you are putting your money in the bank’s vault. They are getting to decide what to do with your money instead of you. Would you retire sooner if you could put that extra money towards your retirement savings account? Would you pay off your mortgage sooner if you could put that extra money towards your mortgage as additional payments? Would you take longer and better vacations because you could now afford it? My point is that it is your money and if you can keep more of it, you get to decide what to do with it. When you give it to the bank, they get to decide what to do with your money and not you. It is your money, choose what you want to do with it.
You have more control over the credit application process and credit approval than you realize. When you know what is being looked at and what is being measured in the credit application and what is needed to get approved for credit, you are able strengthen these areas. This can be done before you meet with the banker to apply for credit. When you are able to give what the banker is looking for to them, it becomes easier to get approved for the credit you want at the interest rate you deserve. I was a banker for 10 years and have studied credit for an additional 10 years, and know how to get approved for credit. I can show you what you need to do given your specific individual credit circumstances. If you would like to work with me, please contact me.