Factors That May Affect Your Consumer Loan Application
Consumer loans are credits that banks and other lending institutions extend to individuals for household, family, and personal purposes. People apply for credit because of a present financial problem or an impending expense. But in as much as we relish the approval of our loans, consumer loans are strictly regulated because of the lesser bargaining power of individuals. Banks and lending institutions may turn down our application for a consumer loan because of the following factors.
Credit Score
Through credit bureaus, banks and lenders can monitor your repayment habits. This will determine your credit score. If you have been paying your dues on time, you will surely get a high credit score. Individuals who had defaulted on their repayment of their loans will have a low credit score in return.
In some countries like Norway, people applying for consumer loans but have bad repayment remarks are automatically ineligible for consumer loans.
Indeed, your credit score can indicate the approval of your loan, the loanable amount, and the interest rate that will be applied to your loan.
Sources of Income
If you have a stable source of income, a bank will compare your income to the loanable about you are applying for. Your income can indicate your paying ability, so if you have many sources of income, your loan will have no trouble of being approved. But if you have another loan, all your income should be able to cover the new loan that you are applying for.
Permanency
When you are living a nomadic life, or you are someone who does not live long in a particular area, your chances of getting a consumer loan from brick and mortar lending institutions may be bleak. A permanent address is always an important data in a loan application form. In a way, banks can easily check on your reputation and other data that you entered in your application form when you are living in a permanent address.
Employment Record
Your employment record can help your loan application be approved. A stable job means a steady source of income. If you are a permanent employee and you do not have a current loan, it can guarantee that your loan will be approved. A good employment record which shows that you never had an administrative case filed against you will have a positive impact on your personality.
There are other causes of why your loan application may not be approved. Some of which may be subjective, but that’s how it goes. You can never argue with a bank when that is their decision. What is important is there are many banks and lending institutions in which you can try your luck.