I t’s widely acknowledged that bank credit standards vary among banks and that, even with one bank, its credit policy will vary depending upon chang­ing economic conditions. Coupled with the cost of borrowing, tougher credit standards mean you should make every effort to keep your borrowing require­ments down. But when you do have to borrow, here are four tips to help you keep the cost of borrowing to a minimum.

1. Negotiate interest rates.

Not all banks will immediately quote their lowest rate. If you can’t get a some­what better rate by asking a few ques­tions, it might pay you to shop around – preferably with your bank’s biggest competitor.

2. Don’t borrow more than you need.

In most cases, the best strategy is to establish a line of credit for a given period of time. However, be sure to keep a close watch on the fee the lender charges for the unused portion of your line of credit. The typical charge often varies among banks.

3. If you have a solid relationship with a loan officer, stay with that bank.

This is particularly important as credit standards become tighter. When a loan officer sees that your financial management history has been good over a period of time, your credit stand­ing is greatly enhanced.

4. When your cash flow is good, con­sider prepaying a loan.

This simple strategy can improve your credit stand­ing, save you money, and enhance the lender’s opinion of your ability to man­age money.

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