Am I Ready to Get a Loan?

You should only take out a loan when you really need it. It’s almost always a good idea to take out a loan for big purchases, like buying a house or a car. Generally you should not use loans to pay for regular living expenses, like your heating bill or groceries, unless you are disciplined about paying back the money. Remember that paying back money over time means that you pay back more than you originally borrowed.

Loans come in many forms. Any time you are spending money that you don’t already have, you are getting a loan. Credit cards, overdraft protection, sales financing, personal loans, home equity line of credit are all types of loans.

Loan Readiness Checklist

• Do you have a good reason for wanting to borrow money?
• Do you have a steady income and stable employment for at least two years?
• Do you pay your bills on time or before the due date?
• Do you have low debts?
• If you had a bankruptcy, did it happen more than four years ago?
• Do you a have a budget that lets you know how much you can afford to pay for a loan?
• Do you having a savings account or personal property that can be used as collateral?

You don’t need to satisfy all of the items on this list, but the more you have, the better your chance of getting a loan.