|
When applying for a loan most people often wonder what is being considered when determining approval and interest rates. While all creditors use different strategies, the information used is all basically the same. Some creditors use just their instinct and experience while others use statistics and credit scoring systems to base their decision. Different creditors can reach different conclusions based on the same set of facts. 99% of creditors will obtain this information from the three major credit bureaus (Equifax®, Experian®, and Transunion®)
Items creditors consider when evaluating your application are:
Income and Expenses- Do you have the capacity to repay this loan?
Stability- How long you have lived at your home. Length of time you’ve worked at your current job. (Longer=Better).
Debt- How much money you owe.
Personal and predictive Information- Your history in promptness of paying bills, checking and saving account Balances.
Assets- Homes, Businesses, ETC.
Creditors will use this information in many different combinations to base their decision. Examples of Information Creditors Can’t use on their conclusions are:
-Race
- Age (except to verify legal age to enter contract i.e. 18 and over)
- Gender
- Childbearing Plans
- Public Assistance such as Social Security |
