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There are countless reasons a person may find themselves seeking to borrow money, but the process involved in deciding how to obtain financing is always the same. Whether you’re looking to borrow to make improvements to your home, pay for your next travel experience, or merely consolidate existing debts, you have to apply the same fundamentals to your borrowing decision.
When considering borrowing, arguably the most critical question that you will encounter is whether you are actually able to obtain financing. In most cases, the answer to this question is found in your credit score; if your credit score is classed as “good” or above, then obtaining financing should be reasonably straightforward. If your credit score is less than favorable, borrowing becomes more challenging.
It is vital to ensure that you only apply to borrow when you know the chances of acceptance are high; every “hard” credit search leaves a mark on your credit file, which can actually harm your creditworthiness. There’s little point in sustaining these search marks if there was a slim chance of obtaining credit, so check your score and, if necessary, follow the tips on nerdwallet.com in order to improve your score before making applications.
The modern world has provided a range of different borrowing options, but credit cards and personal loans tend to be the most popular choices for a reason. Deciding which is right for you depends mostly on the reason for borrowing: if you are looking to make a large, single purchase, then credit cards and loans are worth considering. Alternatively, if you’re looking to make multiple purchases or need to have cash available - for example, if you’re obtaining a loan to finance a holiday and need spending money - then a personal loan is likely to be preferable.
Furthermore, it’s essential to factor in repayments when deciding which borrowing option is right for you. Loans offer a fixed monthly repayment, which can make it easier to budget, while credit cards are a little less certain - ultimately, you have to choose how you want to repay, and the repayment term, then decide which type of borrowing most suits your circumstances.
When deciding to borrow, it is often tempting to look no further than your existing bank - but this could mean that you settle for a rate that is far from ideal. As with anything in life, shopping around is essential; it’s especially important to check more innovative types of lending, such as Fintech options like creditculture.sg or peer-to-peer lending, so that you have a full overview of all of the choices available to you.
When you’ve found a provider you think may suitable for your needs, it’s advisable to take the time to read a few online customer reviews before making your application. While most providers are reliable and trustworthy, a slew of bad reviews can indicate that you may be better served going elsewhere.
Regardless of the method of borrowing you choose, or your original reason for borrowing, following the above process will help to ensure that you are able to make the right choice for your finances every single time.
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