There are at least five keys for the process of seeking financing to be successful. 40% of credit applicants make mistakes.
A credit It is one of the most important financial decisions. Monthly payments can compromise between 20% and 40% of the income personal and family for several years.
Likewise, they constitute the main instrument to finance a venture, a house or a car, among other purposes. Therefore, it is necessary to take into account what are the mistakes most common when requesting a credit; and what steps are essential so that the process does not end in failure.
Not lie.- This is the error more common. In about 40% of requests for credit two main inconsistencies are found: declaring more income than the ones you really have; and not reporting delinquent debts on your credit history.
Investigate before.- borrowing to finance your business, or buy a house, among other purposes, is not just any decision. The process requires time and patience, and therefore you must organize yourself to do a preliminary investigation.
This means requesting information from as many banks and cooperatives as possible, and asking each of them for the maximum amounts of loan, term and interest rate.
It is also important to ask for an example of the amortization table, that is, the breakdown of due dates and amounts to be paid during the term of the credit. This will give you a clear idea of how much you’ll have to pay each month and whether your personal budget can accommodate that obligation.
Likewise, you have to understand what are the requirements that each financial institution asks for; and be sure that you comply with all.
Finally, the investigation process also includes knowing the ABC of credit. That is, understand and become familiar with concepts such as amount, capital, interest rates, terms. With this, you will know exactly what you are getting into.
Have a credit history.- It is important to build a profile as a debtor over time. Before ordering a loan Bank account must have at least one year of credit history. This is achieved with responsible handling of the credit card and even through purchases with credit direct in shops and large stores.
What’s more, You need to understand what information is included in your credit history and how you can check it periodically. This information is one of the main letters of introduction to any financial institution.
Know with certainty what the money is needed for.- A key point is to identify the need that you want to cover and define the purpose that the borrowed money will have. In the case of a business in its initial stage, it must be taken into account that one of the main mistakes is not clearly determining what the financing is needed for: raw material, operations, opening expenses, among others.
Have a monthly budget.- About 30% of applicants for credit You have no idea what your monthly budget is. They don’t know what their money is being spent on. income, and they even do not know what their real debt capacity is.
In general, the fee for a loan may represent between 20% and 40% of the income; so first of all, the applicant must be clear that he has that space in his personal finances.
For startups, the key question is when will they start generating profits; and if monthly sales are enough to cover all operating expenses. Even alternative sources of payment should be considered, in case the business does not go as expected. (JS)
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