How to apply for a Loan or a Line of Credit

Times are difficult and you might be considering borrowing some money, but make sure you look at your credit report and calculate some ratios, before heading to the bank.

Difficulty: Easy

Instructions

1. What you want to do is figure out how much you exactly need. Banks are not lending a lot, so don't ask for more than what you need. If you want a line of credit, whatever amount you ask for is going to be available to you whenver you need it, after you use it and pay it back it will be available for you again. A loan is a one time deposit for the lump sum in your account.

2. So you know how much you need. Now calculate yourself if you will qualify for that amount. Do this before you actually turn in an application, because you want to be realistic. What you are applying for has to be under 35% of your income, so this is your calculation.

3. Monthly Rent or Mortgage + minimum payments on your credit cards or any other debt + 3 % or the amount you are applying for / (divided by) your monthly income.
   
   This should be under 35%.
   
   
   Example:
   
   I want $10,000
   
   Rent: $1000
   Minimum on credit cards monthly: $400
   3% of Applied amount $10,000: $300
   
   Total: $1700
   Monthly Income: $5000
   
   
   $1700/$5000: .34
   
   I am at 34%, so most likely I would qualify for this amount.

4. Dont forget your credit standing. Most bank, (Bank of America, Citi Bank, Union Bank of California)are now requiring atleast a 680 credit score. So if your credit is not 680, it is most likely not going to get approved. Ask the bank you are applying with what their minimum credit criteria is. You can get a free credit report from numerous websites. Your credit standing is important.

[lakerlover]

on 11/22/2008 thanks