When you submit a loan application for a payday installment loan, your major concern is to be approved by the lender. Approval times of a loan application for a payday installment loan vary depending on the lender. There are loan applications that are easily approved and some that are not. This depends on the information given during the application and also by some background checking done by the lender.
To be easily approved, there are certain factors you need to consider. These factors are vital in the approval of your loan application for a payday installment loan. Take note of these factors:
- Payment History
This is the main tool on any lender’s list when it comes to approving a loan application for a payday installment loan. Generally, slow, late, or missed payments can be reasons to be turned down for a payday loan. Your ability to repay makes up a huge part in the approval of your loan. So, it is advisable that you apply for lines of credit that do not exceed your income so payments will not be difficult.
Other lenders compute the debt-to-income ratios of payday installment loan applicants to ensure that they can pay for the loan when the due date comes. Remember that an unblemished payment record can offset negative comments on your credit history. Your payment history comprises 35% of your total creditworthiness.
- The Current Percentage of your Available Credit
Most financial experts say, pushing your credit limit is dangerous. It’s better to have 2 accounts with half-limit levels than one that is maxed out. Some say the ideal debt-to-income ratio is 30% for a revolving account. So, as much as possible, when you intend to apply for a payday installment loan, make sure that the percentage of your available credit is not totally maxed out. This also indicates your financial status. The more your credit is maxed out, the harder it will be to pay for your debts and new loans.
- Length of Credit History
Credit Reports may not be significant in loan applications for payday installment loans but a credit history is very important. Your credit history will give your lender an idea of how you handle your finances and debts. This will help in their loan decisions of whether to approve your loan application or not. Also, your credit history will tell of your creditworthiness through your payments on your previous lines of credit. Usually, a two-year track record of on-time payments will be a big help in raising your standing and increasing your chances of being approved of a payday installment loan.
- “Mix” of Credit Types
Many lenders take into consideration the variety of the credit types you have applied for previously, such as mortgage loans, credit cards, car loans, and other personal lines of credit. A diversified mix of credit types reflects a long credit history. But, make sure that you have a good payment history on these lines of credit in order to assure the approval of your payday installment loan application.
Latest Applications for other Lines of Credit
This is usually a red flag for lenders, especially if they are successful. So when you intend to submit your loan application for a payday installment loan, do not apply for other loans. This can signal desperation and a possibility of being caught in a debt spiral. Your loan application will be easily declined by the lender for this reason.