The reality of economics is that at some point in your life, you will be forced to borrowmoney in order to be able to achieve certain milestones such as owning a home, a car or even doing an MBA in order to get a promotion at work. Your spending habits will ultimately dictate your ability to borrow.
We take a look at 5 ways to improve your borrowing power.
#1 Maintain a good credit rating
By now you are aware of what a credit rating is therefore we won’t go into the nitty gritty of it. Basically, the better your credit rating, the better your chances of securing finance from a lender. Your credit rating is mostly determined by your debt settling history therefore you have to ensure that all your utility bills, credit card bills and all other bills are paid on time. This will ensure that any lender who looks at your credit report does not see any potential red flags.
#2 Ensure all your debts are paid off
Before any lender can give you money for any purpose such as a mortgage, a normal loan or an auto loan, they will first seek to find out how much debt you currently have. Therefore, the more money you owe, the lower your chances of securing financing. Make it a habit to pay off your debts promptly and never let them accumulate. You will be in a better position to access money from lenders if you have very few or no debts.
#3 Lower your expenditure
Before any lender can give you access to finance, they will want to assess your ability to pay them back. This means that they will look at your spending habits and try to identify any pattern that presents as a red flag such as borrowing to settle any of your outstanding bills. It is therefore important for you to lower your expenditure and ensure you are living comfortably within your means.
#4 Work towards increasing your income
The more your income, the higher your chances of securing finance from any lender. Therefore, if you know that at some point in your life you will need to borrow money for a big project, make it your goal to increase your income. You can do this through fighting for a promotion at work or starting a business to supplement you income.
#5 Ensure your accounts are organized
Having organized accounts is especially important for people who are self-employed. As a rule, before any lender gives you access to their finance, they will require a statement of your account for the past at least two years. The more consistent your income, the higher your chance of securing financing. Having your accounts organized is the only way you can demonstrate consistency in income.
Be sure to borrow only if very necessary.