7 Things You Need To Know About Personal Credit

Catching a loan can help in times of budget tightening. Before going out in search of a personal loan, ideally you should know the step-by-step of this process and understand how financial institutions decide to release a line of credit.

1 – Who can apply for a loan?

The common basic thing to get a personal loan with a good rate is to meet certain requirements: to be between 18 and 65 years old, to reside in the same country (with the country the loan company belongs to) and not have the name denied in credit bureaus.

2 – Do I need to submit many documents for credit analysis?

What is common for all institutions is that you need to prove that you are (identity document), that you have money to pay the installments (proof of income, and other documents that show that your income is not very committed to other financing or loan) and that it is possible to find you if necessary (proof of residence). There may still be other documents and bureaucratic processes depending on the institution, so it’s worth doing a more detailed research before hiring.

3 – What happens after asking for a credit analysis?

The financial institution will analyze your documents and data and decide if you have a credit offer, how much you can afford and what your interest rate will be. Every institution has its criteria, so for each one it may be that you have a different rate. If you have bad credit history then you’re suggested to choose personal loans for bad credit.

4 – How is a loan released?

Every consumer has a “fame” in the financial market. The name of this is score, which is nothing more than a note summarizing if you are a good borrower. The score is calculated in different ways in each institution or bank, and it is the main factor that indicates whether the credit should be released for each person or not.

5 – Only the score decides if I will have credit?

Other features are also taken into account, of course, but all are calculated within the score. Recently, there has been a growing search for alternative methods, such as the analysis of information captured by social networks and attempts to understand more clearly how the consumer handles money.

6 – What information should I be aware of when applying for a loan?

The main information is the interest rate, and whether it is being calculated in nominal or TEC format. One tip is to always ask for Total Effective Cost which is the interest rate plus other administrative costs, such as insurance. That’s the interest rate you’re going to pay after all.

Also, make sure that the payment term, the installment and the total amount payable fit in your pocket.

7 – How long do I get the money?

It depends on the financial institution you have chosen and if the documentation is current and unpaid. In more agile cases, such as online loans, you can get the release within two business days.