Loan Center

One can never tell what the future will bring. The future is full of so many uncertainties that you can never really make any kind of long term plans and then assures yourself that you will have your future covered and prepared for any eventualities.
One of the most uncertain aspects of living are the financial emergencies that often sneak up on you when you least expect it. It could come in the form of a sudden medical emergency, increased tuition for your children, a sudden need to repair or replace an expensive part of your car, or maybe your bills are due this month and you have found yourself short on actual hard cash. When these things happen you need a fast solution to the problem. The reason for this is quite simple — the nature of a financial emergency is that money is needed right NOW. The immediacy of the need for the money is what makes it so difficult for most people to address. The best solution to these problems is often by taking out a loan.
A loan can immediately solve the pressing need to get cash because the money is (after the application and assessment) readily made available to you. Of course, the catch here is that the loan that you have taken out will earn interest. This means that you will be paying back more money than you loaned. But then the interest imposed on the loaned amount is but a small price to pay for the easy solution to whatever money dilemmas you may be experiencing. The ability to get money precisely when you need it is what makes loans quite attractive to many people. More and more people are resorting to loans in order to fulfill certain financial obligations. On the other hand, lending institutions are coming out with new loan products that better address the needs of borrowers.
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How Do Creditors Evaluate You?

How Do Creditors Evaluate You?
Banks and credit card issuers
consider a variety of factors when you request an extension of credit.
By far, the most important factor is the Debt to Income Ratio (DIR).

Debt, in this situation has a special meaning. It includes all
sources of potential credit, debt and liabilities that are available
to you. So for example if you have a credit card with a $2,000 credit
limit but usually carry only a $100 balance month-to-month, creditors
will use the $2,000 figure as your debt on that credit card account,
not your actual debt of $100.

Having too many credit cards that you
don’t use can negatively affect your creditworthiness. Such items as
outstanding mortgage balances and school loans are also included in
your Debt calculations. Contrary to popular belief, Stafford
loans and other government subsidized loans are included in your Debt

In evaluating credit worthiness of a
consumer, banks and other creditors calculate your Income by
including all sources of income, including salaries, bonuses, rental
income (if you are a landlord for instance) and benefits you receive
from the government. It is thus advantageous to provide your creditors
with verifiable information on all your income sources. As an aside,
income obtained by illegal means cannot be considered by creditors in
calculations of your Income.

High Debt to Income Ratio is a
warning sign to creditors, and is a likely reason that your request
for extension of credit will be rejected, be it credit card, mortgage
or car loan. From the viewpoint of banks, an optimal DIR is about
20-35%. Surprisingly enough, a very low DIR may also cause your
application for credit to be rejected. In this situation, your past
credit history becomes very important. What the banks want to know is
why do you have so little credit? Is it because you are a bad credit
risk or is it that you did not request credit before.


In evaluating your request for credit,
creditors use your credit profile (also known as credit history).
Aside from the items that were discussed above, creditors pay great
attention to whether you have had a history of late payments. While it
may seem to be quite insignificant if you are late with your payments,
creditors have no way of knowing whether it is a result of oversight
or financial inability to pay, and by default they make assumption
that it is the latter.