People applying for loans may often get disappointed when their loan application gets rejected by the lenders sighting several reasons. A person applies for loan when he is in bare need of money to meet some kind of emergencies like education, medical, housing and so on. So, when the expected loan amount is not received at the right time one may face dejection and leads to stressful condition.
Bad credit scores is often the most commonly sighted reason for not sanctioning the loans by the banks. So, one must clear bad credit rating and keep a positive credit history to enhance the chances of getting the loan sanctioned. The following are the factors often considered by the banks and other financial institutions for sanctioning any loan and it can be coined as five C’s:
The credit history of a person is the major factor that forms the basis for approving the loan. In simple terms it is a history of your past credit and contains the detailed report of your previous credits taken and the people from whom it was taken and so all. Also, it gives a detailed analysis of the payments made by you and the time within which you made the payment. If you clear bad credit rating then the lenders will have more confidence to lend money as the risk level tends to be higher in case of bad credit score. If you need the help of expert to clear bad credit rating visit this link http://www.clearcreditsolutions.com.au/ for further information.
Repayment of the loan has to be done on timely basis. So, the lender will look into your income earnings other than salaries, assets that can still become the basis for loan repayment in case you lose your job are taken into account.
The capability of the person seeking loan decides the lender’s risk of loan extension. Factors like past history of your employment and income levels along with the stability of income are all considered by the lenders to evaluate the person’s capability to repay the loan as per the schedule.
The loans extended by the banks and other financial institution are for specific purpose like education loans, housing loans, personal loans and so on. Every type of loan comes with it a percentage of interest and so the lenders will check the purpose for which loan is sought. The bankers will consider the way the money is going to be put to use.
Secured loans require you to provide some asset as a security for loan. From the collateral value, lenders will deduct the existing debts and then determine if the balance is capable of covering the loan currently sought.
Being aware of the factors will help you in getting easy approval for your loan.