It is important to check your eligibility before you apply for any type of a loan. Each lender has their own eligibility criteria for applicants which need to be met in order to obtain a loan. The benefit is that, in case you do not meet their requirements, you can avoid submitting your loan application as it will most definitely be rejected and can put a dent in your existing credit score.
All money lenders will run a credit check when you apply for a loan, some lenders use both types of credit checks which are listed below.
- Hard Search.
A hard search credit check gets recorded on your credit file and can affect your credit score. If you frequently submit multiple loan applications in a short period of time, lenders can see that and will perceive you as someone who is in urgent need of credit.
- Soft Search.
A soft search credit check does not reflect on your credit file nor does it leave any negative markers against your credit score. You can check if you are eligible for a loan and your approval rate before submitting the loan application.
What is a Loan Eligibility Checker?
A Loan Eligibility Checker is an online tool designed for loan applicants to check their eligibility without visiting the bank or the money lender directly. The eligibility can be calculated on any kind of loans such as an education loan, home loan, personal loan, etc. Usually, a Loan Eligibility Checker will require certain parameters to estimate your chances of approval.
These parameters are listed below.
- The age of the loan applicant.
- The status of employment as well as prior work history.
- The minimum salary requirements.
- The loan amount required.
- The applicant’s existing credit score.
Once these factors are taken into consideration, an overall score will be generated. This score signifies the chances of approval of the loan applicant. The Loan Eligibility Checker is an immensely useful tool. However, keep in mind that it is only an indication and not an affirmed guarantee.
What are the Main Benefits of a Loan Eligibility Checker?
- Helps in Protecting your Credit Score
When a number of loans are applied for in a short time frame, your credit score can be negatively impacted. This will in turn, hamper your chances in obtaining future loans. By using a Loan Eligibility Checker, the loan applicant can easily find out if they meet the terms of eligibility, resulting in fewer applications being submitted. This will lower the chances of a bad credit report and increase the possibility of acquiring the loan required.
- Helps in Saving Time
With the aid of a Loan Eligibility Checker, the loan applicant can compare the interest rates and repayment cycles according to their financial circumstances without visiting the lender in person.
They can choose the best option suited for them and then submit their loan application for the approval process. This saves the applicant a significant amount of time and speeds up the decision process.
Documents Needed When Applying for a Loan
After the lender has checked the credibility of the loan applicant, there are certain documents required to be submitted in accordance with the lender’s terms and conditions. These documents provide additional information that can guarantee if the applicant can be trusted with the amount of money loaned.
Some of these are listed below.
- Proof of the age of the applicant (18 and above).
- Proof that the applicant is a resident in the UK.
- Proof of the applicant’s current address as well as addresses for the past 3 years.
- Proof of the applicant’s type of income (self-employed or employed).
- Details of the applicant’s employer such as name, address, and phone number.
- Details of the applicant’s bank account number and sort code.
- Details of the applicant’s bank statements of the last 6 months.
- Details of the applicant’s latest salary slip.
- The application form along with a photograph for identity purposes.
What is a Pre-Approved Loan?
If a lender offers you a pre-approved loan, it means that they have enough information on you to know that you will payback the loan amount without defaulting on payments. This is possible if you have borrowed from that lender before and have proved that you are capable of being responsible.
What to Check Before Applying for a Loan?
Before submitting your loan application, it is important that you have done enough research and checked all the options available for you.
To ensure that you are prepared to take on a loan, check the following listed below.
- If the loan amount required can be acquired through an alternate source (from family, friends, or relatives).
- If the loan amount can be repaid alongside the applicant’s other commitments.
- If the loan amount will have a large impact on the applicant’s credit score.
- If the applicant can improve their credit rating before applying for a loan.
- If the applicant is confident that the loan chosen is the best deal he or she can get..
Remember, when trying to acquire a loan, it will be much easier if the applicant has an excellent credit score and has consistently maintained an up to date credit record. By using a Loan Eligibility Checker online, the applicant can know where they stand and what are the chances of them getting their loan approved.