It is true that hard work and budgeting your finances well will eventually paid off. But there are also time in our life that even we have our own savings in our bank account, that saving is not enough. While someone might consider it okay to borrow money for all things big and small, others might be strictly against the borrowing of any sort. People borrow money or apply for a loan for different kind of reasons – some are good reasons, and some not.
We borrow money because we want to buy something but our savings is not enough for it. It may be as large as buying a property or a car, you want to renovate your house, for your education or your children’s education, or something smaller like furniture or a computer or maybe it’s to start a business and a lot more. Some also borrow loan to pay for their other loan or in other term debt consolidation.
Whatever the reason you have to borrow money, professional financing options are many and varied especially nowadays. They range from traditional financial institutions, like banks, credit unions, financing companies and a lot more.
But the big question here is how to determine if you are a good candidate for a loan. The loan application form is your resume, and the requirements you submit are like your portfolio. Let me share to you some factors that can determine if you are a good candidate.
Credit score is far and away the most important for every lenders. They need to check it because they need to see how you’ve managed money you’ve borrowed in the past. We are all just human and because of that we make mistakes, we all go through rough spots. But what matters is how you manage them. If you’ve had some debt problems and managed to continue to have a good debt-to-income ratio, then it will work in your favor.
Income and Employment
Another important thing that lenders need to consider is your monthly income. They just want to make sure that you have a steady money coming in for you to be able to pay the loan. Lenders also may verify your employment with your boss. The lender needs to know where you work, what your job position is, how long you’ve been at your current job, and how much salary you earn. They just want to know that you will be able to pay back what you borrow.
Loan Purpose And Loan Amount
The loan purpose may be personal but some or most lenders ask the purpose of your loan. The lender wants to know the purpose of your loan because they need to know the level of risk that they will face in case they approve your application. They will also ask how much money do you need. You must prove to the lender that you’re borrowing only what you exactly need – no more, no less.
Aside from the factors I gave, there are other factors a lender may take in consideration but what is important, if your loan was approved make sure to be responsible to pay it. Remember that debt you’re carrying is bad for your mental and physical health. If you are considering debt consolidation solutions to roll all your debts together, so you don’t have to juggle multiple payments, click here for more information.