Best Geographic Locations to Get a Loan

Best Geographic Locations to Get a Loan

Do your neighbors’ creditworthiness affect your own ability to secure a loan? According to CardRatings.com, the answer is yes. Here are the best and worst states for loans and what you can do to improve your own chances of securing approval.

The Domino Effect

CardRatings.com analyzed a variety of important credit factors and determined that average credit scores, delinquency rates and foreclosure rates, unemployment and bankruptcies all negatively affect the overall lending environment. According to the analysis, lenders in these states may be in financial distress themselves simply because their borrowers aren’t repaying their loans — and that means less choice for you.

Even for top tier borrowers with stellar credit, ample resources and steady income, local lenders may simply lack the capital to lend at favorable terms. According to CardRatings, residents of Nevada, Georgia, California, Florida, Arizona, Alabama, Tennessee, Michigan, Mississippi and Idaho may all find it difficult to secure high quality loans.

Residents of the Dakotas, Vermont, Nebraska, Montana, Wyoming, Iowa, Pennsylvania, Alaska and Minnesota enjoy the highest overall average credit ratings and relatively low rates of unemployment and bankruptcy as well as the best loan terms.

Increasing Your Chances

Before you pack up and move to the best country for loans, take time to consider your options. Building and maintaining excellent credit by paying your bills on time every time, never letting your outstanding balances exceed more than 50 percent of your available credit, putting down at least 20 percent on a home loan and demonstrating steady income from your business are the best ways to make yourself an appealing candidate, even if you live in Nevada.

Traditional lenders may still require residents of the “worst of” states to adhere to stricter guidelines. Searching for lenders who have a home base elsewhere may help. Searching for a private investor or lender through a service such as CNF Exchange may help, too, as lenders are more likely to consider individual circumstances because they don’t have to follow the rigid underwriting rules that traditional lenders do.

Finally, don’t overlook the cost of doing business in your state. Forbes reports that New England, with its high energy costs and tax burdens, makes even businesses with stellar credit scores spend more than they otherwise would.