There are times individuals will find themselves neck deep in debt. The result of this is losing his credibility and will be considered to be bad risk by any licensed money lender and probably be blacklisted by them. However, individuals can still redeem themselves from this so here are ways by which an individual can restore his BORROWING power with various financial institutions.
Understanding the Policies of Lending Companies
Lending institutions will look several items when assessing your loan application. These include your credit score or credit standing, income and history of employment and most important of your entire debt ratio. Find your problem areas in these three things and once found you need to correct them immediately. If you have been tagged as a bad credit risk because of over borrowing, the only way to turn this around is by paying and zeroing out your entire or at least a majority of your existing debts. This may pose as a big financial problem but you must find the resources to cover these debts. If you can zero out all or majority of your debt, then your credit score will again start to rise and your Total Debt Servicing Ratio will go in your favor. In all probability banks and other lending companies will start to see you as a good credit risk.
Getting the Bank’s Confidence on your Side
Another good way to get the bank’s confidence to be in your favor is to find other means of financial sources. This may be in the form of another job or starting a small business that will augment your main source of income. This will make them realize that you are now earning more than what you earn before and therefore incurring more than enough money to cover your current expenses. To test your credit standing, apply for a very small loan from an approachable lending company. If you’re still considered a bad credit risk, then even a small loan won’t be granted to you but if approved, then you know you that you are again in the good graces of the lending community.