Do you have an emergency saving account or a some stash in a piggy bank for a rainy day? To prepare for a financially fit and proper lifestyle, you need insurance to cover unforeseen negative events, emergency savings and investment plans to help you sleep easy knowing that the present and future financial obligation are taken care of. Where do you start?
Most people think they will be able to get a loan should they need money in a hurry. In hurts to be denied credit when you need it in an emergency. If you don’t have an emergency fund or money in a savings account, you need to be clued up about your options on how and where you will get funds in an emergency. If you believe borrowing or getting a personal loan will be an option, make sure you will be able to qualify for a loan. How you are currently managing your accounts will determined how easy or how quickly you will get a loan approved in an emergency situation.
A clean credit record will put you in a good position, not having any debt or accounts does not necessarily qualify as a good credit score. Your credit score is based on how you use credit product or conduct with credit accounts, not having credit accounts or little credit history automatically gives you a low credit score. If you have defaulted on your accounts recently, the banks will in most cases automatically disqualify you. The first thing you need to do is to check your credit report. Know your credit score. Make sure no one is making credit or account inquiries on your behalf without your knowledge. Your credit score need to have a ‘FAIR’ or better rating if you want to be able to access debt in a hurry, like in an emergency, a poor credit score does not necessarily mean you will not access credit but if limits your options. Limited options will put you in a difficult position.
Another important element when preparing to apply for a loan is your conduct with bank account over the last three months, debit order reversals on three or more accounts in the same month or reversing debit for an amount of five hundred Rand (R500) or more in any one one month over the three month period of the bank statement could hurt your chances of getting a loan.
For assistance to start on your fit and proper financial path, get a no obligation assessment on your financial wellness plan.
Tshepo Phekonyane is a financial adviser at Metropolitan. Do you have a Metropolitan related inquiries?
Send us your contact details and Tshepo will call you back.