Mistakes To Steer Clear Of When Applying For A Loan

Applying for a loan can signify an exciting moment in one’s life. Maybe it’s to start your business, or maybe it’s to finally take care of some credit card debt. Regardless of the context, there are certain grave errors in judgment that you would do well to entirely steer clear of. We’ll take a look at those below.

1. Not Considering All Your Options

Always take a wide-reaching gaze of the market when it comes to considering your loan options. Don’t bite on the first seemingly golden option. There could be another completely unexpected loan option just waiting for you out there.

2. Outright Assuming You’ll Get Approved For The Loan

An image of a person signing off on a paper document.
Scott Graham/unsplash

It’s all well and good to stride through life with a little swagger in your step, but when it comes to personal finance matters, it’s always best to put the bravado on ice, and take it slow when applying for a loan. A major way folks get caught up in surprise disapprovals is when they receive those handy “pre-qualification notices” in the mail, which only means that lender performed a soft inquiry. It’s the eventual hard inquiry that can flip the script on you.

3. Skipping Over Reading The Fine Print

A person pointing at a laptop screen.
John Schnobrich/unsplash

The attention span economy has certainly seen brighter days. With so many apps and their quick-hitting videos all vying for our attention, it’s especially hard to slow down, take that sacred pause, and really read through the fine print when the significant life moments require it. Don’t skip reading the fine print on a loan. Just not a good idea for the fees that could be hiding in plain sight alone.

4. Not Checking Your Credit Score

An image of a person checking their credit card on their laptop.

It’s generally a solid habit to keep tabs on your credit score. Not checking in on your credit score on a regular basis can expose you to instances of fraud, or you might end up applying for a loan that you’d have had no fighting chance at being approved for in the first place.

5. Applying For Multiple Loans At Once

It’s natural to get the nerves going when you’re apply for a loan. You might end up feeling like your best bet is to take a scatter shot approach, and apply for multiple loans at the same time. Do not do this. Loan applications require hard credit inquiries. These very inquiries can temporarily affect your credit score. And if your credit score dips to such an extent, that very dip might negate your ability to get a future loan that you’d otherwise have had no trouble securing.

About Author