So, you are ready to apply for your first loan. I could wax poetic on things to keep in mind as you enter the world of using credit. Instead, I’m going to focus on tips to help you rock that first loan application.

As you can probably imagine, different financial institutions (banks and credit unions) have different standards for what they consider a responsible borrower. These decisions are based on how much risk they feel you represent, given your current credit report and history. As with anything else in your financial life, I highly recommend you trot on into your friendly local credit union for help with your first loan (and all others). Countless nationwide independent studies show that credit unions save consumers big bucks every year with lower interest rates and fewer fees.

So now that you know where to go, what can you do to be ready?

Employment history

At my credit union, loan officers want to see that a young adult has been employed. They prefer to see two years of employment history in a similar field. For example, even if you have worked at different fast food joints, if you have always been a cashier, that looks better than if you are constantly changing roles and industries completely. A turbulent work history indicates that you might be a more risky investment. If you haven’t had a job for that long, even showing three months of work history can be helpful, if you plan to bring a down payment and a co-signer. Either way, you will need to prove a steady source of income.

Account history

Since this is your first loan, your credit score is going to be minimal. Having an account at the institution you are applying for your loan from (AKA- your credit union) will help your loan officer see how responsibly you manage your finances. Do you overdraft a lot? That’s kind of a red flag. Do you have a bill payment that regularly comes out of your account? That’s a positive. Since your account history isn’t connected to your credit report, the only way your loan officer will see this is if you are applying for a loan where you already bank.

No negative info

Still, a blank report is better than a bunch of negatives on your credit report, so until you are really ready to babysit that loan, just steer clear. When you get credit, treat it like something that can have a big impact on your life for years to come—because it WILL. Negative account information will stay on your report for six years and nine months, and will be hard to overcome when applying for your next loan.

Remember to regularly monitor your credit history at annualcreditreport.com

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