Getting a low-interest rate personal loan will help you to save money when you make the repayment. Usually, low APR means the monthly repayment will be cheaper. The following are 3 ways on how you can obtain the best APR rate for your personal loans.
1. Evaluate Your Credit Report
First of all, you must request for a copy of your credit report from the experian.com to perform evaluation for errors. It is common for credit score to be miscalculated as a result of errors in the credit report. Getting some errors fixed could improve your credit score and help you to get a lower APR interest rate.
When you notice an error, you can follow the procedure to launch the dispute. When launching the dispute, you must clearly identify what items you are disputing. Second, you must state the reasons for launching the dispute. Third, you must request that they delete the item on your credit report. The credit bureau will perform the investigation and make correction to your credit score within 30 days.
2. Improve Your Credit Score
If you don’t have any urgent expenses, it is advised that you improve your credit score first prior to applying for the loan. To improve your credit score, you must be on time in paying your bills. If you consistently pay your bill on time, you will surely see an improvement in your credit score in 6 months or more. You must budget your expenses in order to make sure you have the funds to pay the loan by the due date. You can do this by cutting down unnecessary expenses for example luxury items and movies.
Besides, you should avoid applying multiple loan requests at the same time. Each time you apply a loan, the creditor will make a hard credit inquiry that can cause the credit score to low some points. The best way to compare loan rates is to fill the online form to get preapproved first. Getting preapproved only involves soft credit inquiry so your credit score will not be affected.
3. Maintain a Low Debt to Income Ratio
Having a low debt to income ratio can also help you to get a low APR interest rate. Low debt to income ratio means the total amount of outstanding debt you have is lower than the total income that you have. To maintain a low debt to income ratio, you should control your credit card spending habit.
It is recommended that you keep your credit card usage ratio to 25% – 30% limit. For example, if your credit card has a $3,000 limit, you should only spend $900 on the card every month. Maxing out the credit limit can make it difficult for you to make the repayment at the due date.