When applying for credit, you should be aware that what creditors may think is important when deciding your creditworthiness.
Also, you should know that there are things that they cannot legally consider in their lending decisions.
The Equal Credit Opportunity Act requires that all applicants be considered on the basis of their actual qualifications for credit and are not to be turned down due to certain personal characteristics.
Lending institutions are concerned about ones ability and willingness to repay debt.
They are basically looking for credit-capacity, character, and collateral.
Capacity deals with the ability to repay the debt.
Employment information, duration of time worked, and how much earned is typically what lenders may ask for.
In addition, they may also want to know about some of the obligations such as dependents, alimony, child support, and the amount of other obligations.
Lending institutions look at your credit history to determine character.
They want to know how much you owe, how often you borrow, whether bills are paid on time, and your ability to live within your means.
They also look for signs of stability in terms of how long you stayed at your place of residence, if you own or rent, and the length of your current employment situation.
A lender wants to know if there is some protection if you are unable to repay the loan.
They look for collateral which can be used to secure a loan.
Lenders use various combinations of these facts in reaching decisions.
Some have high standards and do not offer certain kinds of loans.
Others may use different rating systems while others rely on instinct and experience.
Different lenders may come to different conclusions based on the same facts.
Some may find that you are an acceptable risk, while others may deny you a loan.