If you are facing a large expense and lack the immediate means to finance it, you may wish to consider applying for a personal loan. Simple Path Financial, along with many other banks and lending institutions, are able to provide personal loans to individuals who apply for them, depending upon various factors. Some of the variables which may determine whether you will be approved for a personal loan are outlined below.
Your Credit Score
Your credit score is calculated based on your history of paying back debts, such as your monthly credit card bill, car payment and mortgage. Credit scores range from 300 to 850. A score below 650 is generally considered poor, while a score between 650 and 700 is fair. A credit score above 700 is good, and a score between 750 and 850 is excellent. If your score falls within the “good” to “fair” range, you may still be qualify for a loan, but you will most likely be asked to pay a higher interest rate.
When determining how much of a risk it will be to lend to you, lenders will consider your income and how it compares to the loan’s payment schedule. If, for example, your net income is $4,000 per month and the loan’s terms would require you to pay back $3,000 per month, the lender may infer that you would struggle to adhere to the schedule of payments and thus be hesitant to offer you the loan. On the other hand, if your net monthly income were $8,000, you would be much more likely to be approved for a loan which required a $3,000 per month repayment.
Your Employment History
You may have a high monthly income now, but has that income been consistent? If the repayment period for your loan would last for several years, your lender may wish to review your employment history in order to determine whether you are likely to be reliable in your payments. A spotty employment history could raise red flags.
It will be helpful for you to keep all of these factors in mind as you submit personal loan applications. To protect your financial stability and credit, consult a financial adviser and make sure that you will be able to adhere to the schedule of payments prior to entering into a loan agreement.