Do You Qualify for an
Unsecured Personal Loan

Qualifications required for an unsecured personal loan

Everyone would like to think they qualify for an unsecured personal loan, but the truth is that very few people are able to obtain a loan without some kind of collateral unless it is a small amount. Unless you have a very high credit store very few lenders will even consider lending anything over £5,000 with some having a cut off substantially less than that. Before you make up your mind that you will only accept an unsecured personal loan, you want to look at the factors that determine whether you qualify.

What is your credit history and credit score?

Your credit score has a large impact on your ability to obtain an unsecured personal loan. Some lenders will not approve even a small personal loan without collateral if your credit does not fall at least into the “fair” category.

Not all lenders have the same criteria for an unsecured loan, but you want to make sure you conduct some research before you attempt to insist you will not secure your loan with any collateral. With so much competition within the online community, you certainly have options. However, you have to do your homework in order to know which lenders are more likely to give you what you desire than others.

How long have you worked at your current job or in that career path?

The longer you have been with your current employer, the better your chances are of being approved for an unsecured personal loan. At the same time lenders also understand that consumers will move on to another company in order to improve their opportunities. Thus a department manager who moves to another company as an Assistant Vice President will not necessarily kill his chances because he moved forward to improve his chances for advancement. If the same person left his company simply because he didn’t like the company or his subordinates or co-workers, the lender would not see him in the same favourable light.

Do you lease or own your home?

Even with an unsecured personal loan you will look more stable to a lender if you own your own home. That doesn’t mean that tenants look bad to lenders, but they just don’t see them as having the same stability as homeowners. After all, even if they have lived in the same place for many years, there is still the possibility that the owner may decide to sell the property, and the new owners will want to live in it instead of leasing it. They also feel that homeowners are more financially stable because they have more to lose if they default on a loan.

What is your debt to income ratio?

Lenders make to make sure you have enough disposable income to cover the payments on your loan. In most cases if your debt to income ratio is above a certain amount the lender will not approve a secured or unsecured loan. It is too risky for the lender to advance loan proceeds to someone with many debts because the borrower may end up defaulting or filing bankruptcy. Make sure you know where you stand before you decide to apply for any kind of unsecured loan.

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