This page will tell you a few factors that can affect your chances of loan approval. Loans can be of great benefit in times of financial hardship, but it is important that you treat them respectfully and do not default on your payments. Defaulting on a loan payment can have a huge impact on your financial record and can haunt you for the rest of your life. If you are struggling with repaying your loans, you can likely strike a deal with the company and reduce your monthly payments [but of course, your interest will increase].
Here are some factors that affect the chances of loan approval.
Credit Rating
The most significant thing to affect your chances of approval for a loan is your credit score. Traditionally, a poor credit score would reduce the likelihood of loan acceptance, although according to the loan specialists at GreenStarCash, this is not the case anymore, and you can get poor-credit loans. Even so, it is good to keep your credit rating in good form. While some loan providers do accept those with poor credit, that is not the case for all of them, and mostly, a poor credit score will mean denial.
Investment Proof
If you are a regular investor, there is a good chance you may be asked to provide your investment statements to the loan provider you are applying with. Lenders may want to see your 401(k) and IRA statements so that they can verify you will be able to pay back the loan in the future and have disposable income. This is especially true for older people who are no longer employed and are retired, as other than investments, they may have no way to repay their loans.
Proof of Income
When many people apply for loans, they falsify their income. This, unfortunately, happens quite frequently. Because of this, many loan companies now require proof of income to be sent along with the application. If you have nothing to hide and do have the income you are saying, then this will not be a problem. If you do not, however, this will mean instant denial. Always be forthcoming about your income. Lying to get a loan will not only affect you if they find out but will mean you are significantly more likely to default and not be able to repay your loan.
Housing History and Proof of Address
You will also need to provide evidence of your housing history and proof of address. This is to verify that you are not sleeping rough [homeless]. Just by virtue of having a home to live in, your chances of loan acceptance increase. It is important to always be honest with regard to your housing, as they may perform a check, which, if you are found out to be lying about, you could be accused of fraud. You will need to provide bank statements, proof of address, and ID to verify your home address.
Payment History
If you have bad credit, a lender may still consider accepting you for a loan, providing that you have a good payment history. Just because you have bad credit, it does not mean that it cannot improve. The only way to improve your credit is to make regular repayments on outstanding debts. By doing this, the loan provider will see you are making an effort to honor your debts and will consider giving you a loan more than if you were not. Always honor your repayments regardless of whether or not you are applying for a loan, for if you do not, the consequences can be devastating for your financial record.
Social Media
You may be surprised, and perhaps shocked, to find out that lenders actually browse your social media pages to determine whether or not you are frivolous with money. Lenders from across the world are doing this now to establish if you will honor your repayments or spend the loan on useless things. For this reason, if applying for a loan, be sure to remove anything that could make you look bad for a loan application from your social media pages.
Debt-to-Income Ratio
The debt-to-income ratio is another way in which loan companies decide whether or not somebody can be trusted with a loan. Ideally, you will want to keep your debt-to-income ratio below 40%. If you have a higher debt-to-income ratio, it could be used against you when you are applying for a loan. That said, this is rare.
With the help of this page, you now know a few things that could affect your chances of getting a loan. All of the things on this page can be a detriment to your loan in one way or another. Good luck, and always honor your repayments.