People who own their own home have always held an advantage when it comes to being approved for a loan. By putting their property up as collateral, they much reduce the risk that the lender will lose out if the loan isn't kept up with - the house can be repossessed and sold to clear the debt. This obviously doesn't apply to tenants, so what do lenders take into consideration when deciding whether or not to approve an unsecured loan application from a non-homeowner?
Firstly, basic financial information such as income and rent levels are appraised to see if the loan will be affordable. If it looks like the borrower's finances will be stretched by taking on a new loan, it's unlikely to be approved.
Next, the credit history of the individual is examined to see if they have a past record of missing loan payments and the like. The more negative information there is on the credit file, the harder it is to be approved. Conversely, if the applicant has a good credit history with plenty of sound financial activity, then the chances will be increased.
If you're a homeowner, some adverse credit information will probably be overlooked. What if you're a tenant with bad credit and can't get accepted? The only option may be to find someone willing to guarantee your loan. This might be a parent or other family member who is willing to use their own assets and creditworthiness to back up your application, agreeing to take on the responsibilty of meeting repayments if you should fall behind.
Martin writes for Tenant Loans where renters of all financial backgrounds can apply for an unsecured loan.
Article Source: http://EzineArticles.com/?expert=Martin_Sumner
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