Criteria For Loan Applications

Lenders consider many things in deciding whether to extend a loan. Not all lenders use the same factors. But there are some common guidelines that lenders use when evaluating loan applications.

Capacity - Lenders will review your employment history to determine if you have the capacity to repay your debt obligations. How long have you been working at your current job? How much do you earn? What is your future earning potential?

Credit - Lenders will review your credit history; consider how much debt you have incurred, and how you manage your debt responsibilities. How much do you owe? Do you pay your monthly bills on time? Are you consistently late in paying bills?

Character - Lenders will look at how you pay your bills. They will also take into consideration any history of lawsuits or bankruptcies.

Collateral - Lenders will evaluate the value of the property, a source of protection for the money they lend. The lenders want a guaranty that they will get back the money they lend. Is the property worth the risk? What are the chances that the property will decrease in value?