Chris O'Shea
If you’re considering applying for a loan, take a step back and try to understand what lenders look for. The more insight you have into the criteria for loans, the better chance you’ll have of being approved. Here’s what lenders look for.
Credit Score
Lenders want to see a high credit score. The higher your score, the lower the risk you are to lenders. That means before you even apply for a loan, you should check your score. If it needs improvement, set that as a goal first. The easiest and fastest way to raise your score is to pay your bills on time, every time. Once your score is higher, apply for the loan.
Pay Back
Lenders will also look at how your income and debts impact your ability to pay back your loan. The lender will consider your income and employment stability. The longer you’ve been at your job, the more steady you seem to a lender. Lenders will also look at your debt-to-income ratio, which is the total amount of debts divided by your income. Lenders like for your ratio to be 30 percent or less.
Other Assets
One thing that can help you when applying for a loan is to have other assets. If you have significant savings and/or investments, lenders will appreciate that. It shows stability, so if you happen to lose your job, you have other means for paying off the loan.
Do One Thing: Before applying for a loan, make sure your credit score is as high as possible.
