How Bad Credit Lenders Determine If You Can Afford a Loan

• March 10, 2017

It isn’t ideal to find yourself in a situation where your only option is to acquire bad credit loans. It will affect your personal life and your finances, irrespective of the path which led you to the situation you have on your plate, which entails that you require such financing.

But that notwithstanding, life must go on! And the good news is that there are several bad credit lenders who would be willing to avail their lending facilities to you, irrespective of what your credit score reads. But have you ever wondered how these lenders determine your loan affordability? Here is how:

Your Income

The first thing bad credit lenders tend to consider is your income. It is possible for you to have a poor credit score, even if you make good money, which may result in your failure to acquire a loan. The bad credit lenders will thus scrutinize your various sources of income after taxes and other expenses are deducted. This information will help them in knowing whether despite your poor credit score, you still have some cash which can be allocated to the loan repayment, should your application be approved.

Considering the surplus

It may be possible that you have a surplus after all the taxes and expenses are deducted from your earnings, but if the surplus is less than the amount of money you will be required to pay on a monthly basis until the debt is fulfilled, then the bad credit lenders may deny you the loan.

Your employment history

If the two above factors check correctly with the bad credit lender, the next thing they will look at is your employment history. A person with a stable full time job is more qualified for a loan than a college student who works part time. Besides, such an individual will also get lower interest rates on that loan.