We want to take a bit of time and explain to people just what lenders are looking for when someone applies for a loan. We won’t call them industry secrets but it may help a few that are trying to decide if they would qualify.
First of all the thing that petrifies all lenders is “Fraud”. Fraud is much worse than an applicant that is in financial difficulties. Lenders cannot work out repayment plans with fraudsters.
If you as an applicant can demonstrate to a lender that you are not a fraud risk, you are a long way down the road to getting accept. We would say that about 45% of a lender’s decision is based on fraud indicators.
Indicators of fraud are usually found on a credit file. These include being on the voters roll, how many loans have been applied for at that address, how much the loan is for etc. There are some other indicators that we won’t go into for obvious reasons.
Another big factor is recent financial history. Good or bad credit isn’t really what lenders are looking at. Good and bad credit could be anything over the 6 year history of a credit file. What is important is – does an applicant appear to have a declining financial status. If there is a pattern of increasing number of defaults that appear to be gaining momentum? This is issue for a lender and they may ask further questions.
However if someone does have a very poor credit history but shows an increasing healthy record of late, they stand a massive chance of being accepted.
We would urge people to think about if a loan is actually in their own best interests. Sometimes loans will make things worse. There are free alternatives out there for people in difficulties.
Being accepted for a loan may be the worst decision for some applicants.