At some point in life, it is almostguaranteed that you will be applying for a loan of some sort. Payingcash for products and services is not only becoming obsolete, it'sterribly inconvenient. Today, credit is a way of life, and as more andmore people begin to shop online, plastic is the currency acceptedeverywhere.

The most basic of loans is of course, the credit card. Companiesthat issue credit cards make money every month that you carry abalance, and they are betting on the fact that you won't pay off thebalance every month.

Some loans actually make good business sense. Why would anyone want to shell out $300,000 for a new home when they could get a Home Loan and pay $1,000.00 a month, and then deduct the interest paid from theirincome taxes? That three hundred grand could be put to work in otherinvestments, and could conceivably earn more for you than you areactually paying for the house! And all that time, if you time it right,your house becomes more and more valuable.

There are also times when for many people things just aren’t goingwell financially. An unexpected expense occurs and you find yourselfjust coming up short on your living expenses. Many types of loans existfor this type of situation, both secured and unsecured.

Maybe you just need some quick cash to get through the holidays, andintend to pay the loan off within the next few pay periods. Companiesoffering short term Payday Loans abound both on the Internetand off. Some with no credit check will transfer up to $1,500 into yourbank account within 24 hours.

Student loans, auto loans, small business loans, personal loans, home loans, second mortgages, payday loans, government loans, bad credit loans, loans to consolidate other loans – there is a loan for just about any occasion out there.

The question is how much are you going to pay for your loan? And theanswer to that depends in most cases on your credit history.

Your Credit History:Weather or not you get the loan, and how much it will cost you.

It is never too early to start establishing credit, and the best wayto do this is with a credit card. If you are finding it difficult toobtain a credit card because you have no history, you can always buyyour history by applying for a secured credit card or line of credit.Put down $500 or $1,000 and borrow against it. Make sure theinstitution you are applying to reports to the major credit bureaus,use the line of credit and pay your bills on time, and voila – you havea credit history! There is nothing wrong with carrying a balance over,just pay the minimum or a bit more, and pay it on time! Creditors liketo think they will be making some money off of you.

What Lenders are Looking For

While different institutions have different criteria, there are somegeneralizations one can make about how they determine thecreditworthiness of an applicant. Make no mistake about it; creditorsare in the business of making money. If your credit is less thanperfect, it doesn’t necessarily mean you won’t get the loan, but youwill be paying more for it!

After receiving your application, a lender will then acquire acredit report from one of the three major credit bureaus, Equifax,Trans Union, or Experian. This is your credit history. Taking intoaccount such factors as your income, the balances in your checking andsavings accounts, the assets you own, the length of time you have beenat your current job and place of residence, the amount you owe othercreditors, and how promptly you pay your bills, the potential lenderwill then make a determination on if you will get the loan, and howmuch they will charge you for it.

Frequent late payments, bankruptcy, repossessions, legal judgmentliens, or accounts being turned over to collection agencies do not bodewell for obtaining a loan. That being said, most creditors realize thatlife happens, and such legitimate circumstances like an unexpectedillness, injury, or the loss of your job do not necessarily reflectnegatively on your creditworthiness.

When Things Take a Turn for the Worse

If you are in the process of paying on a loan or loans and one ofthese unforeseen circumstances befall you, talk to your loan officer.Most loan institutions find it in their best interest to work with thelendee, and will often make the necessary arrangements to make iteasier for you to make your payments. Just remember, they want theirmoney, and the last thing they want is for you to default on your loan,or heaven forbid, declare bankruptcy!

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