Posted by It is always wise to know a few things before you make a decision of borrowing money so that it can help you are applying for a loan in the right manner. Most of us assume that a credit score is considered by the lenders when reviewing the application form. However, there are other important factors that are taken into consideration by the lenders when you apply for an Unsecured Personal Loan. An unsecured personal loan is a form of credit that can be borrowed by the lender without using any kind of security, such as – a car, a home, or any other valuable possessions. Typically, lenders offer a borrower to borrow an amount ranging from £1,000 to £35,000 that has to be repaid within one year to seven years. Lenders will definitely want to see your complete financial profile to make their decision and to set the rate of interest as well.
Factors considered by the lenders while reviewing an application form
Credit History
This is an important component of your financial profile and therefore, your credit history is reviewed by the lender to make their decision. A credit report contains all the information and clearly indicates your personal finance management. Any past bankruptcy or unpaid bills may affect the rate of interest. The rate of interest you will be offered depends on the credit report. Make sure that there are no mistakes before you send in your application form.
Debt to Income Ratio
A lender will want to know how much you earn every month and how much is your total expense to make their decision. It doesn’t necessarily mean that your income must be high. It completely depends on how much you spend because that will allow a lender to assess whether you can easily repay the loan to them.
Eligibility Criteria
Different lenders have different criteria to review and accept the applications. Before sending in your loan application, you must review the lender’s eligibility criteria to know whether you fit in their requirements or not. Apply for an Unsecured Loan only if you feel that you meet the lender’s eligibility criteria.
Final thoughts
It is important to know the factors beforehand to protect your credit score from any damage. Whenever you apply for a loan, the lenders assess your loan eligibility by conducting credit checks and every time your profile is checked, a few points are knocked off from your score. There are a few lenders who conduct a soft credit check to offer initial quotes and soft check loans do not impact your credit score. However, a hard credit check is conducted by the lenders and it is mandatory by law. So, save your credit score and always apply for a loan after a thorough analysis of your financial circumstances. Also, ensure you repay the loan on time and in full to avoid any damage to your score. Borrow responsibly to build a secured financial future.
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