John E. Pytte
Borrowing and Loans Lawyer Savannah | How Do Banks Decide Who to Loan Money To?
If you've ever gotten turned down for a loan or a credit card that you thought you were going to get, you've probably asked yourself, "What were they looking at?" The truth of the matter is that lenders analyze several pieces of information before they decide to lend consumers money. Some lenders have automated systems that stop the application process before it even touches human eyes. In the following article, we will take a closer look at the selection process; lenders look at these factors before determining yes or no.
Your Credit Score
You probably already know that your credit score has a significant impact on a lender's decision to grant you credit. In fact, it's probably responsible for 85 to 95 percent of the decision. Most lenders use the FICO scoring system, which is the 300-850 point system. If your score is above 800 points, the term "no" is usually not in a lender's vocabulary. A score in the 700-800 range is usually good, and everything else is questionable.
The most unpredictable score to have is a "fair" one. Some people receive amazing credit card approvals while they are walking the "fair" line. Other people get turned down for everything. It's not always your score that determines the decision, but its significance is undeniable.
Some lenders require great detail when they are considering loaning their money to you. Your income is important because it speaks volumes about whether or not you’ll be able to afford the payments. It is definitely recommended that you tell the complete truth during this process. Lying about your income to get a credit card will only end in disaster if you can't afford the payments. It's better to tell the truth and be denied, than to have missed payments and a tarnished credit report, and require the services of Borrowing and Loans Lawyer Savannah.
Lenders also look at a concept they refer to as stability. You may be a wonderful person who just likes to explore and move around, but that way of living is frowned upon in the credit world. Creditors look at things like the number of employers and addresses you've had over the years. Generally, two years at the same residence is the beginning of stability to creditors. The same rings true for employment.
Your Collateral Standings
Creditors consider whether you have anything that you can give them if you fail to make your payments. For example, you can put your car up for collateral if you own a car. You can use your home if you are a homeowner. With collateral, the lender knows that they will have a way of getting their money back if you default on your loan. Lenders are more likely to rule in your favor if you do have collateral.
Your Direct or Indirect History
Finally, lenders look at your history with them and the history that you have with their partners. They generally will shy away from you if your name pops us as someone who hasn’t done so well in the past. You may have turned over a new leaf with the way you handle your credit now, but lenders may feel that your behavior in the past makes you a risky consumer.
Borrowing and Loans Lawyer Savannah
These are some of the things that potential lenders analyze before they make decisions. Before requesting an advance, try to improve areas that you struggle with the maximize your potential of being approved. Having debt management troubles? Let the premier Borrowing and Loans Lawyer Savannah, Georgia Debt Relief help you during your time of need. Over the years, our team has acquired knowledge and expertise, and will give you the best advice.