Credit can be frustrating! It’s hard to get if you’ve never had it and even harder to start over after you have encountered obstacles. Even more frustrating is not knowing where to go when you need help. LPI Loans has made financial education a priority. We understand that in order to be fiscally successful you must first understand the ins and outs of credit. We want to encourage you to look to LPI Loans for guidance and advice.
There is a lot of misinformation and half-truths floating around out there about credit and we want to help quell that. If you have been turned down for a loan and you aren’t sure what you can do to improve your credit, then you have come to the right place. Look to us for financial facts, tips, and strategies for improving your credit.
Employment and Income History
If you ever wonder what lenders are looking at when you apply for a loan, you aren’t alone. It’s important for a lender to determine whether you can comfortably afford the proposed monthly payment. One good indicator of this is stable employment and past income history. This is why lenders ask for paystubs or last year’s tax returns. They take the data they have collected about your debts and income to calculate your DTI, known as your debt-to-income ratio. DTI is the percentage of your debts compared to your after-tax income.
Payment History
Another area of focus for a lender is your past pay history. A big part of qualifying for credit is based on what you’ve done with the credit extended to you in the past. This information is usually collected from the data listed on a credit report. The information on a credit report may vary from report to report, but the same basic information is always listed, such as the name of lenders who have extended credit to you in the past, the type of credit you have, and your payment history on those accounts. If the lender sees that you have managed to meet those credit obligations on time in the past, they are much more likely to offer credit to you now.
Value of Collateral
Collateral or security is also a big factor when requesting credit. The value of your collateral is evaluated and the lender will subtract value from the collateral if you have existing debt associated with the item. The remaining equity will help determine the amount of credit that could be extended to you.
There are other factors that go into credit approval and they vary from credit institution to credit institution. At LPI Loans we take into consideration all of life’s unexpected events because we want to hear the whole story. We understand that your individual situation cannot be determined by a number and that is why we don’t use a credit score to determine a person’s credit worthiness. This is one of the many ways LPI Loans helps you get to yes!
