Sometimes we need a loan to assist us in getting our finances in order or to help us get through a rough financial time. After we ask around to friends and family and get firmly rejected, it becomes clear to us that we need to go to those who provide loans as a business, in order to get the job done.

What many of us discover when this is the case, is that lenders have very strict criteria that they use when determining to whom they will lend out their money. Maybe you need a home loan, a debt consolidation loan or a quick short term loan. Long term loans and short term loans each have their own set of terms and conditions that you are required to meet in order to get approved. Here are some of the most critical.

Have enough income

Payday and short term loans look primarily at your income in determining if you will receive a loan. The amount you make will determine what they will lend you, which will be a percentage of that amount as the maximum. They will also look at how long you have been at the job and your employment history as well. When you go for a longer term loan, you will asked to provide your income and this will be used to calculate how much you are able to pay in monthly payments. They will also look at your other expenses that will need to come out of your income. This total amount will determine everything: if you will get a loan, how much you will be able to borrow, and the terms under which you will be able to keep the loan open.

Have security

For payday and short term loans, your security is your job and the lender will place a lien on your wages until his loan is repaid. For longer term loans, the lender will look for you to provide some forms of collateral to secure the loan. Fir a home improvement loan, the lender might require you put up your home as collateral. For a car loan, you might have to place an amount to be held in an account while the loan is active. The need for collateral is weighed against the borrower’s credit worthiness including their credit score and history. If both are very good, the borrower will need less and perhaps no collateral. These factors change over time and what may have been standard last year may be unacceptable today. A borrower discovers the exact criteria when seeking a loan.

Have a good debt repayment history

Whenever you seek a loan, your credit history will be evaluated and considered to some degree. The more money you want to borrow and the fewer terms tied to that money, the stronger your credit history will need to be in order for you to qualify. For short term loans like payday loans, your credit history will only play a very small role in you being considered for a loan. However if it is revealed that you have a history of fraud or other financial related information, you could be rejected. For longer term loans like revolving loans, your debt repayment history being solid is critical. You should expect that the loan agent will check both your credit score and your credit report. If it is revealed that you have instances of late debt repayments, it will negatively impact your credit score. A low credit score will increase the interest rate on your loan and may cause you to be denied for the loan.