THE HELP YOU NEED TO GET TO “YES” ON A FUTURE LOAN OR CREDIT CARD
Have you been turned down for a loan? Or are you worried past money issues might stop you from getting one in the future?
When your finances aren’t quite where you’d like them to be, it can be easy to feel a bit overwhelmed. But it is possible to turn your money challenges around and Summit’s here to help. Check out our step-by-step plan, then connect with our lending experts. We’d love to help you get and stay on track with your money.
Step 1: Think about what might stop a lender from giving you a loan or credit card.
A good lender wants you to be successful. If they think your finances aren’t in a good place, they won’t want to lend you more money and make it harder for you to be successful. Here are the three common things that can stop you from getting a loan and steps to help address each one.
Delinquency: This means you were late on your loan payments. Even if you never actually missed a payment, a lender might see late payments as a sign your finances are in trouble. And the loan payment you were late on could be for a credit card. Credit cards might not seem like a loan, but they are.
Worried about a delinquency? This can help.
- Take care of past debts. If you’re not up to date on current loans, now’s the time to contact each of your creditors and come up with a plan to get on track.
- Stay current on existing loan payments. If you were turned down for a loan in the past, you’ll need to show a good track record of timely payments to be considered in the future. The number of payments can vary, but 6-12 months of on-time payments is a good starting point.
Excessive obligations. The combination of your spending and debts is higher than your income. See Steps 3, 4 and 5 to help you manage these issues.
Insufficient income. Two things can cause this. Either your income isn’t high enough for the amount of debt you want to take on – for example, the general rule for a car payment is that it shouldn’t be more than 15% of your gross monthly income. Or, you have too much debt that is unsecured, which means there’s no collateral for a lender to take back if you don’t pay your loan. Credit card debt is unsecured; a car loan or home mortgage is secured.
Not enough income for the loan you want?
- Ask for a smaller loan. Set up an appointment with a Summit loan officer to learn what amount you might be able to qualify for given your current finances.
- Save up for a down payment. Do you have your heart set on a certain vehicle, boat or whatever you were borrowing for? Save your money. You’ll be able to borrow less and that could help you qualify for the right-size loan. This might require some short-term changes like a part-time job or cutting expenses until you’ve built up those funds. Want to kick-start that down payment plan? Consider taking the One-Month No-Spend Challenge!
Step 2: Check your credit report.
You can get a free report each year and it’s a good idea to get in the habit of checking yours. This can help uncover credit issues you need to take care of, like potential mistakes on your report. Your Summit lender will be happy to review your report with you and suggest ways to improve.
Step 3: Create a budget – and stick to it.
It’s hard to dig out from under if you don’t have a good understanding of where your money is going every month. We’ve got a tool that makes it easy to create a budget, track your spending and set and achieve your financial goals: Summit’s Climbr®. Once you’ve got Summit’s Climbr set up, you’ll be able to know exactly how much money you have and how much you owe, every single day. This is a great way to start improving your financial picture.
Ready to build better money habits? Check out these spending tips.
Step 4: Cut expenses.
Use what you learn from Summit’s Climbr to reduce your spending. For instance, what are you spending on “little luxuries” like cable, takeout and impulse buys on Amazon? Do you have late credit card payment and ATM fees – better planning could help you avoid those. Do you need to look at bigger changes – like moving to a less expensive apartment or getting a roommate? (And watch out: some big changes have expenses connected with them, like moving costs).
Step 5: Pay down your current debt.
These four strategies are a great place to start. Is credit card debt your biggest challenge? Try this four-step plan.
Step 6: Start saving.
It can be easy to think, “Ugh, I’m struggling to pay my bills – how can I possibly save money too?” But if you don’t get in the habit of saving, it’s easy to get in an endless loop of pulling out your credit card whenever you hit an unexpected expense...and all too easy to add extra, unnecessary, spending on top of it.
Get $1,000 in your rainy-day fund. You can do it! Check out this article for a five-step plan to get you there.
Step 7: Test drive your new (potential) payment.
Once you feel comfortable with your monthly budget and your ability to stick with it, experiment with how it would feel to have an extra loan or credit card payment. Transfer that money to your savings account for a couple months. You’ll build up your savings (always a win!) and get a chance to check out your ability to manage that extra cost.
Step 8: Keep going!
Getting on track won’t happen overnight and it won’t always be easy. But we know you can do it – and we’re here to help.
Online financial tools and resources
You’ll find loads of great tools on our website to help you research financial topics and manage your spending, saving and planning. Check it out today!
- Summit’s Climbr – Summit’s easy-to-use digital tool is a great way track your budget, spending and saving.
- Blogs
- Calculators, worksheets and checklists
- Webinars
- Financial education programs
- Podcasts
