Qualification for Banks Loans

Qualifying for a bank’s loan can have different criteria depending on the country you live in. In the US, for example, your FICO or credit score is very important. In other locations, like Spain for example, there is really no credit score taken into account and they pay closer attention to earnings. Nevertheless, there are some general and universal rules when it comes to qualifying for banks loans.
First of all, you don’t want to have any other pending loans. Obviously if you are requesting credit, you don’t want to already have a lot of loans on your cash flow sheet. A bank is very unlikely to lend to someone who is already in debt. Although, if your debt to income ratio is good, you made stand a chance, or if your debt actually brings in investment cash flow. (Of course, if you were a savvy investor you probably wouldn’t be reading this article!)

Obviously overall income is very important for getting banks to loan to you. A general rule is to have 3 times the earnings of the debt you have to pay off.

Other factors are length of current employment or business income and single or joint income. Of course, the longer and more consistent your income has been, the better your chances for the loan. If you are married and both spouses are working that’s also an extra guarantee for the banks who are considering the loan.

Probably the last key factor in obtaining a loan would be collateral. Do you own a home, cars or anything of great value the bank could take from you to get their money back in case of a default? The more collateral you have, the better, especially owning your home outright.

Finally, having a co-signer can greatly boost your chances. If you are responsible with your money you shouldn’t have too much difficulty in getting a family member or close friend to co-sign the bank loan request for you.