Bankruptcy & Foreclosures

One of the questions that I seem to encounter time and time again pertains to borrowing money; specifically what’s the best method to get a lender to shell out the cash you seek while not raking you across the coals (interest rate wise) in the process? I’ve been quick to dispense a bit of wisdom from my standard bag of tricks throughout the years but now it appears as though the tides are turning against the borrower as the economy goes through its shake-up. Don’t get me wrong, it is still possible to borrow money, but lenders are tightening up and potential borrowers are going to have to apply with a bit more savvy than before.

Credit Score

The first area to increase your chances is by no means unique to the present economy troubles: credit report! Most consumers have some idea of the importance of maintaining good credit but now more than ever will this affect individuals looking to borrow. To give an example, just a few months ago my company had no trouble securing mortgages (subprime) for individuals with FICO scores as low as 500 and now we’re struggling to get scores in the mid 600s financed.

Organization

Lenders are going to respond to organized borrowers now more than ever before. If you need to apply for a loan, sit down with your lending officer with a plan in hand. This plan should include your budget, repayment schedule, and plans for the money in question. If it’s a toss-up between two candidates, odds are your lender will lean toward the more organized applicant.

Capital & Collateral

Sadly the days of 100% financing are blamed for contributing to the whole subprime mess in the first place, so borrowers expecting to walk in with nothing more than a smile are going to have to rethink their strategy. Lenders are currently in the process of decreasing risk so don’t be surprised if they wish to establish personal property or income from another source as a prerequisite to be considered for a loan. Business loans in particular are going to force borrowers into putting up physical property as collateral for loans: Inventory, supplies, buildings, etc.

These are tough times as far as lenders are concerned. If all goes wrong, they are going to be clawing to recover as much of their investment as possible. Keep that in mind when applying for a loan.