Paying for something is not simply a matter of giving cash to someone else. Some of – if not all of – the most important items cost a great deal more than most of us can usually and immediately afford. We therefore borrow money in order to acquire these items, paying these lenders (creditors) back in smaller but more manageable amounts. But these lenders put themselves at risk. After all, they’ve given you a great deal of money and they trust you to pay it all back – albeit with interest.
Thus, the most important thing you can do as a borrower is find a way to increase the chance that someone will give you that cash. This means presenting yourself in a way that highlights your ability to handle the consistent payback of money.
Of course, it could be that highlighting the reality of a situation means showing you can’t pay it back – in which case, this is still good since neither you nor your potential lender lose out. You gain by not having a debt you can’t pay; they win by not losing money they’d otherwise never get back.
By facing the truth, it means you can actually work at it to get better. Indeed, your first step to improvement is always acknowledging just where you can do better, are currently doing badly, and so on. Otherwise you have nothing to improve in the first place.
As Luminita D. Saviuc from Purpose Fairy highlights, the idea that we should ignore and avoid mistakes can itself be one of the biggest mistakes. If we can trace the contours of our failures we can better fill them in with improvement and progress. This makes us better at what we’re trying to achieve.
The whole point is that being better – in our jobs, lives and so on – makes ourselves more appealing to others. Whether potential employers or banks, the better we appeal to others, the more opportunities – whether jobs or loans – are likely to happen.
If you have a record of remaining credit in your credit history, be upfront and indicate why it happened. Explain how you’ll sort it out. Don’t let your potential creditors find it – because you both know they will check.
Face the worst
Creditors want to know about the worst case scenario and more important what would you do. Rachel Bridge from The Telegraph talks especially to small business owners:
“Banks love worst-case scenarios, so include three or four spread sheets showing what would happen if your sales were 10% lower than forecast, for example, or customers paid later than expected, or if interest rates rise. Basically they just want to know if you will still be able to repay their loan no matter what.”
Potential creditors don’t want to hear you claim complete freedom from debt. As Mark Horne, director of Asset-Cap London, says: “It is a myth to believe that ‘I’ve never owed anyone anything’ is a good thing, as it shows a lack of experience in managing debt and fulfilling the terms of a credit commitment.”
Whether you’re wanting a car loan from Nedbank or an ooba home loan, you’re better off taking care of how you present yourself and what position you’re really in. This makes you more likely to get the finance that you need.