When it comes to availing a loan in the UK, it is advisable to use a loan eligibility checker to see if you meet the criteria required by the bank or money lending organizations. A loan eligibility checker is specifically designed for loan applicants to check their eligibility. There is no need to visit the lender or bank directly as this process can be done entirely online.
When availing any kind of loan such as a home loan, personal loan or an education loan, the loan eligibility checker can calculate the loan applicant’s chances of approval based on the following factors listed below.
- The age of the loan applicant.
- The credit score of the applicant.
- The loan amount the applicant requires.
- The minimum salary requirements.
- The applicant’s status of employment along with prior work experience.
After these parameters have been taken into account. A score will be generated which will determine the approval rate of the applicant. Although the loan eligibility checker provides you with an indication of where you stand, it does not completely guarantee that you will get the loan desired as each lender has their own additional criteria requirements.
By using a loan eligibility checker, the loan applicant can avoid submitting their application form when they fail to meet the terms and conditions of lenders which in turn, will keep their existing credit score from taking a hit.
Difference Between Hard Search and Soft Search
When availing a loan, all money lending organizations do a credit check. There are 2 main types of credit checks which are listed below.
Hard Search Credit Check
When a hard search credit check is carried out, it will reflect on your credit report. If you are an applicant that has submitted many application forms within a short duration, other lenders will be able to see this information and will sense that you are someone who heavily relies on credit.
Soft Search Credit Check
When a soft search credit check is carried out, it will not be reflected on your credit report and will not display any negative markers which will impact your credit score. This is useful for applicants with poor credit scores as they can find out their chances of eligibility before they submit the loan application without any consequences.
The Benefits of Using a Loan Eligibility Checker
It can help save time
The loan applicant can consider and compare the best loans to avail according to their financial situation. They can check different repayment cycles and interest rates on offer without visiting the lender face to face when using a loan eligibility checker. By doing this, the loan applicant speeds up the decision process and saves an ample amount of time.
It can protect your credit score
If you have applied for many loans within a short time span and have been rejected by lending organizations, your UK credit score will be heavily impacted in a negative way. Once this occurs, the chances of you availing a loan will be almost non-existent.
What to Check Before You Avail a Loan?
Always remember that before you submit the loan application, it is of the utmost importance that you have carried out enough research and have checked all other available options. Before availing a loan, check the following options.
- Check to see if the loan amount required will have a negative impact on your credit score.
- Check if the credit rating of the loan applicant can be improved before availing the loan.
- Check to see if the amount required can be availed from family, relatives or friends.
- Check to see if the loan amount can be paid back along with other commitments (monthly bills, grocery expenses, etc).
- Check to see if the loan applicant is comfortable with the amount chosen.
- Check to see if the loan amount required does not exceed the applicant’s reach. The applicant must always borrow within their means in order to avoid defaulting on loan repayments.
Always keep in mind when availing a loan, it is much easier to acquire one if the applicant has an above average credit score. The applicant must also maintain a precise and up to date credit record.
How are Credit Scores Calculated When Availing a Loan?
The 3 main credit agencies in the UK are TransUnion, Equifax and Experian. These agencies calculate an applicant’s credit score using a complex mathematical algorithm. Apart from this,
there are other factors which are also considered as listed below.
- The duration for the loan applicant to pay back the previous loan amounts.
- The frequency of how often the loan applicant applies for new credit.
- The amount of revolving credit regularly used by the loan applicant.
- The entire payment history of clear credit cards and loans of the loan applicant.
- The type of accounts the loan applicant has had and for how long they have been open.
What Does it Mean When I Get A Pre-Approved Loan?
If you have been offered a pre-approved loan by a lender, it means that you are a trustworthy individual and is responsible as a loan applicant to pay back the loan amount on time without defaulting on repayments. The lender will perceive you to be capable of repaying the amount due.
By using the online tool called the loan eligibility checker, the applicant can find out their chances of getting a loan much easier. Due to this, fewer loan applications will be submitted to lending organizations which will increase the possibility of obtaining a loan.