Once, it was the loan officer that did most of the work but today it is pretty much all computerized. They use a useful process based on financial credit score and statistical data to make a precise determination about your application. This does not mean the loan officer remains with nothing to do but his job is easier today. He organizes the relevant data that he gets from your credit report: Companies that report if you always made your payments on time, if you were in default, if you paid your utilities bills, and other such payments. All of this affects your credit report. This extensive statement will give the loan officer the relevant evidence he needs to cleverly establish about your credit history. What the loan officer seeks on your credit report are loans in which you made payments on time and paid off the entire balance. They also look for several late payments, collections, repossessions, charge-offs, and bankruptcies. Many lending companies today do not use any other measures besides your credit report to decide whether to give you a loan.

Repayment

 As stated above, if you are applying to get a small personal loan or for a credit card your ability to repay the anticipated loan is not an issue, however, when you are applying for a large amount of money the lending company eventually wants to see that you have the ability to repay the loan. This is done by compiling together how much of your income you are currently paying out to other lenders. If your income is insufficient to pay back your personal loan, the loan officer may help you with your application by suggesting that you borrow less or that you make payments for a longer period of time, thus lowering your monthly payments so you can still qualify for the anticipated loan.

Income

 If your monthly income seems that like enough money to live comfortably and repay the loan, the loan officer will then look to see just how stable your income is. The ideal candidate should be working at the same permanent work for several years. If your employment history shows that you replaced jobs several times over the last few years, then your income will be considered less stable. However, if you are highly trained or highly skilled and can show the moves in employment were beneficial you may still have a chance at getting that loan. One thing is important to remember, no matter where your income is from, a trust fund, public assistance or other means of income, this pertinent data can only be used to show that you have a stable income history and that future income will not be affected. Stability is also measured by the number of times you moved within the past few years.

Credit Scoring

 The answers that you grant to the personal loans officer concerning your income, employment, etc… will be given an overall number. The loan officer has in his possession a standardized credit-scoring sheet, which assigns numerical values or scores to every one of your answers. After you answer all the questions, the amounts are joined up to calculate your credit score. Now, it is up to the lending company as to what they believe an acceptable credit score is to determine whether you should receive a loan. These computerized methods of calculating the credit score take out all human compassion and reason. You may score poorly if you have changed jobs frequently even if the move was for a better income or status. You may have to move several times in a year in your chosen field such as being moved from one location to another to train employees. These moves will also score poorly. The loan officer however, can adjust the score if there are special circumstances to consider, but this does not mean he will eventually get the time to do so.

Under the Fair and Accurate Credit Transactions Act of 2003 (FACTA), mortgage lenders are forced to tell you the approval scores they used in the course of providing the mortgage. For more information on FACTA, see Fair and Accurate Credit Transactions Act of 2003.

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