Borrowing institutions look at five things when considering to lend you money: character, capacity, credit, collateral, and capital.

Character: Lenders want to borrow to honest and reliable individuals. It pays to be honest and open from the start. 

Capacity: refers to your ability to repay the loan. This is based on your current income and job stability. 

Credit: Here, they are looking at your credit score and report to help them determine how you will handle debt in the future. You can review your credit report through TransUnion, Equifax or an app like Credit Karma without harming your credit. If you notice your credit score is low, you may consider building it up before making a borrowing request. 

Collateral: Do you have property or assets to secure the loan? Depending on your request, lenders may require collateral as security if the loan is large compared to your net worth.

Capital: refers to your overall financial picture, which lenders will use to indicate your financial management skills. 

Understanding the metrics lenders use to decide if they will borrow to you can help you bolster your position.

If you have more questions, feel free to reach out to our office to speak with an advisor. We’re here!