Boost Your Borrowing Power with These 5 Steps

1. Improve Your Credit Score

Your credit score is one of the first things lenders look at when assessing your loan application. Here’s how you can improve it:

• Check Your Credit Report: Obtain your credit report and ensure all information is accurate and up-to-date. Rectify any errors immediately.
• Make Payments on Time: Late payments negatively affect your credit score. Set reminders or automate payments to ensure you never miss a due date.
• Reduce Credit Card Balances: High balances can harm your credit utilisation ratio. Aim to keep your balances below 30% of your credit limits.
• Avoid Opening New Credit Lines Unnecessarily: Each time you apply for credit, it can cause a small dip in your score. Only apply when necessary and beneficial.

2. Strengthen Your Employment History

Lenders look favourably upon a steady employment history. Consistency in your job indicates a stable income, which reassures lenders that you’ll meet your repayment obligations. If possible:

• Stay with the Same Employer: The longer you remain with an employer, the more stability you demonstrate.
• Increase Your Income: A higher income may increase your loan amount eligibility. This could mean negotiating a pay rise or considering new job opportunities.

3. Manage Your Debt

Managing existing debt effectively shows lenders that you’re a responsible borrower. Here’s what to focus on:

• Pay Down Existing Debts: Prioritise paying off high-interest debts first.
• Consider Debt Consolidation: If you have multiple debts, consolidating them into one with a lower interest rate can help manage payments.
• Limit Loan Applications: Every loan application can impact your credit score. Apply only for what you need.

4. Save for a Larger Down Payment

The larger your down payment, the less risk you pose to the lender. For big purchases like property or vehicles:

• Start Saving Early: Open a savings account specifically for your down payment and contribute regularly.
• Cut Unnecessary Expenses: Review your budget and identify areas where you can save money to put towards your down payment.
• Explore Down Payment Assistance Programs: Some programs offer grants or loans to help with down payments; research if you qualify.

5. Prepare All Required Documentation

Being organised can expedite the borrowing process. Make sure you have all the necessary documentation ready, including:

• Proof of Income: Payslips, tax returns, or profit-and-loss statements if self-employed.
• Financial Statements: Bank statements and investment accounts showing your assets and liabilities.
• Identification Documents: Valid government-issued identification and proof of address.