5 Factors that Affect the Approval of Online Loans in Texas, With the Exception of Credit Scores
There are several online loans in Texas that are available without a credit check. Most of us strive to sustain the good credit score, as we know that it’s typically essential for getting a loan, but a good credit score may not actually be required!
Based on the formula of credit usage and payment history, a credit score provides an idea to the lenders as to how likely a borrower shall default. It also gives them the amount of risk they are taking by providing a loan.
However, the truth is that not all lenders approve money loans online only by considering a credit score. It’s just one factor to focus on, although it may be a primary one to affect approval. For example, subprime lenders such as ZippyLoan are aware that their customers do not that stunning credit scores. Therefore, they tend to focus more on other factors for approving or declining a loan application.
Well, the fact is that approving a loan is not a precise science. No way exists for you to find out precisely whether your loan shall be approved or not. There is no universal formula for the same. Indeed, there are borrowers whose applications are declined despite a high credit score. Below are the factors that influence the decision of a lender for approving online loans in Texas.
Income Proof Required for Online Loans in Texas
It does not suffice to just mention the income. Many lenders need a proof of it, either in the form of tax return forms, monthly pay slips, or bank statements. These are the only ways the lenders can verify your income that you state. It’s essential for a lender to do so, as it is the only way to ensure that you are capable of repaying.
Job or Employment History Required for Online Loans in Texas
Lenders offering no credit check money loans online, such as ZippyLoan, often peep into the employment history for determining the likelihood of a borrower to repay on time. They will ask the following questions:
- Where do you work?
- Who is your employer?
- What you do at work?
- How long it has been in your current job?
As a rule of thumb, if you have been for more than three months in your current job, the lender is assured that you have a secure job. At this point of time, the lender might investigate further to know about the bonuses and other sources of income such as investments. This is why some lenders ask for 401(k) or IRA documents, especially in case the borrower is retired or has no income source.
In case of self-employment, lenders need a proof that the business has been giving steady income since more than three to six months.
Debt : Income or Payment : Income Ratio Required for Online Loans in Texas
Many lenders of online loans in Texas are interested in knowing the amount of debt a borrower owes and the amount of income that goes into paying it. They use it to calculate the debt income ratio, which is the outcome of dividing debt payments per month by monthly gross income, which is multiplied by 100.
For instance, if the debt payment is $,1,000 and the income is $5,000, the ratio is 20%, which is an acceptable one. According to experts, this ratio should not exceed 36%. This is because the chances of a loan denial increase with the increasing ratio. Despite having a good credit score, a high debt-to-income ratio can keep approval at bay.
Housing and Savings History May Be Required for Online Loans in Texas
Many lenders of online loans in Texas may be interested in knowing the savings and housing stability. Having an active savings account since a few years denotes that you have good skills of money management. After all, it’s not that easy to put money in savings account on a regular basis.
If you can show that you have been putting in it since a long time, it shows the lenders that your fiscal habits are up to the mark. Just as employment, lenders also, at times, check for how long you have been living in your current home. Frequent moves usually may denote money issues.
Latest Payment History May Be Required for Online Loans in Texas
This is a strong indicator of whether a borrower will be able to repay on time or not. If the borrower is facing a tough time in repaying a debt or paying a bill, it simply increases the risk of application denial. It does not matter how did you pay four or nine years ago but it matters how you are paying your bills recently.
Reputation on Social Media Perhaps Required for Online Loans in Texas
New online lenders are looking for new ways to find about the credibility of borrowers, especially for offering money loans online with no credit check. They are examining social media sites for finding out how responsible a borrower shall be.