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WHAT FACTORS LENDERS CHECK BESIDE YOUR CREDIT SCORE?

Nowadays, applying for a loan is as easy as blowing a candle from a cake unless and until if you have a good credit score. However, credit score is a key factor for getting approved for any loan but there are some other factors also which are really important to get a loan for handling any financial crunch. In this blog post, we have listed down some of those factors which are required to be on track before you "Apply For Loan" rather than a good credit score.

  • Debt to income ratio: Besides your credit report, your income and debts acquired by you plays a great role to get an access to any kind of loan. Lenders look out for your debt to income ratio to measure the bridge between your monthly income and debt obligations. If this ratio rises the level of 40% of your gross income then lenders won’t lend you money for your needs as you are declared to be overburdened with debt and a new loan make your financial situation worse.
  • Professional history: Apart from CIBIL and debt to income ratio, the other eligibility criterion a lender would ask is your employment history to check your income stability. A track record of more than two years in a specific company reflects your professional stability which is strongly preferred by the lender.

However, if you have a record of switching the jobs one after another then it could be a cause of concern for your lender and your chances of approval get lower down because of credit risk.

  • Monthly earnings: Your monthly income is also an important thing in credit and loan approvals. Similar to your employment history where your stability is rewarded, your monthly earnings also indicates the lender that you are capable of paying your loan repayments and other financial obligations on time. If the lender is not satisfied with your gross monthly income, he/she will find you as a higher credit risk, and rejects your loan application.
  • Cash flow: No matter what, but every lender needs an assurance that you can easily make your loan repayments even if you are laid off. Here, your cash flow comes into the frame and lender wants to know about your financial assets that can be used to cover your debt in case of any financial setback. Therefore, it means if you have more liquid assets such as stocks, bonds or other deposits, you are more likely to repay your debt on time.
  • Savings: If one has enough money in his/her savings then he/she can easily qualify for lower rates of interest when they "Apply For Loan Online" or offline. Lenders want to ensure them that you have enough in savings despite of what you are paying each month for your utility bills, taxes and insurance premiums, closing costs etc. in addition to that, if you suffer any temporary reduction in monthly earnings, you will be able to repay the loan installments with the savings in your emergency fund.


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