Let's look closely at what lenders are really looking for in credit applications. These are the most important indicators of whether a loan will be granted:
- Do you have a history of repaying loans on time?
- Will you be able to repay this loan on time?
- How much collateral have you put up for the loan?
Every creditor sets its own standards for analyzing loan applications, and these are kept secret from consumers. There are some general standards:
Payment History:
Many people fail to realize the importance of getting bills in the main on time, yet this is probably the most important factor in credit evaluation. Card issuers want to know how you have handled you bills over time, and they especially want to know how prompt your recent payments have been.
Many card issuers will not report a payment as late to a credit bureau if it is paid before the next one is due. For example, if your payment is due on the first of the month, you may pay it on the fifth and find that the creditor does not report you as late.
Credit References:
Any account that appears on you credit report can be a credit reference: a car loan, mortgage, finance company account, major credit card, or department store card. Some credit references are stronger than others, however, and it is important to know which ones are best.
