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How do financiers go about assessing my loan application?

tPara"> On receiving a loan application from you, a lender basically tries to check the likelihood that you can and will repay the money. He does so by examining, rather in a textbook fashion, the "Three Cs" - character, capacity and credit.

Here's what they mean.


A lender gets to know of your financial and personal character through such details as how long you have lived in one place and how long you've been working at your current and previous jobs.


This basically refers to your ability to repay the loan given your income and savings. To estimate your capacity, a lender looks at your existing living expenses, debts on loans you've taken earlier and the additional strain the new loan would impose on you. All this information comes from your loan application itself. Don't try and hide details of your existing loans from the potential lender of the new loan - everything can easily be discovered through your bank statement. Avoid any cloak-and-dagger stuff, it will only work against you!


Basically, this is test of your willingness to repay loans on due dates. The lender will look at your track record of current and past credit relationships. Do you pay your credit card dues on time, or do you habitually exceed limits? What are your current credit limits, and how close are you to those limits? All the answers would be factored in to arrive at a creditworthiness statement.

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