6 Things Lenders Consider When You Apply For A Loan

Apply for a loan

When you apply for a loan, a lender will review your application. If you’re looking to borrow money, and you’re keen to maximise your chances of securing a loan, it pays to be aware of what lenders are searching for when they take a look at your form. If you’ve found a loan that looks appealing, and you’re ready to submit your application, here are 6 things a lender is likely to consider before making a decision.


When you take out a loan, you agree to pay back that sum over a period of time. This usually involves making a payment every month. To approve a loan, a lender will check the affordability of that agreement before giving the green light. If you’re already struggling to cover your rent, your mortgage payment or your household bills, it’s highly likely that your application will be rejected based on the fact that you may not be able to afford to cover the repayments. Before you send an application, it’s essential to check your budget and make sure that you would be able to pay back that loan without overstretching your finances.

Credit rating

Everyone has a credit rating. This is a numerical score, which is given to you based on the level of risk you pose a lender. The higher your credit rating, the better. If you have a good credit score, you’ll find it easier to borrow money, and you’ll be offered preferential rates. If you have a low credit score, your application may be turned down, or you may be offered a loan with higher interest fees.

The value of the loan

Loans vary in value from a hundred pounds to thousands of pounds. If you’re applying for a loan, lenders will evaluate the cost of the loan before making a decision. If you’re applying for a small loan, and you have a stable income and a good credit score, you’re likely to receive a positive response. If you’re hoping to borrow a vast amount of money, the criteria will be stricter, and the chances of approval will be lower.

Your job and your employment history

Lenders want to ensure that customers are able to pay back the loan without any issues, and they prefer to grant offers to people who have a stable employment record and a steady income. When you apply for a loan, you may be asked to give information about your current employment and previous jobs, and to provide evidence of your income, for example, pay slips. If you’re earning every month, and you’ve always been employed, this presents a lower risk to a lender, and the chances of your application being successful will be higher. If you’ve recently started a new job, it may be advantageous to wait at least six months, rather than applying straight away.

How you will cover the repayments

The main focus for lenders is making sure that you can cover your loan repayments. If you’re borrowing money, a lender may look at how you plan to meet the payments, particularly in cases where there is a risk of losing your job, or when applicants who don’t have a full-time position. If you have savings you could use if you were to lose your job, for example, this could strengthen your application.

Your repayment history

A lender will take a look at your credit score when they analyse your application, but they may also take an interest in your repayment history. If you’ve borrowed money and paid it back without any issues, this will strengthen your position and you’ll have an excellent credit score. In contrast, if you’ve missed payments, you’ve been late paying an instalment, or you have outstanding debts, this could put a lender off. If you don’t have a perfect record when it comes to repayments, it’s wise to seek expert advice or to submit a trial application before you hit the send button. If you apply for a loan, and your proposal is rejected, this can have a negative impact on your credit rating.

When you apply for a loan, your application will be analysed and evaluated by a lender. Lenders use certain criteria to make a decision, and it’s beneficial to be aware of the factors that are taken into consideration to increase your chances of success. Banks and other financial organisations look for reassurance when offering loans, and being able to prove that you have a stable income, a good credit score, a stable employment record and money in the bank to meet repayments will stand you in good stead.