What Banks Look for When Reviewing a Loan Application?

Taking a loan from the bank for personal as well as business usage can become a real hassle sometimes. There is a lot of paper work that has to be done in order to get the loan approved from the bank. Most of the people who involve in personal as well as business banking for the first time do not know the concept of these loan applications have to visit the banks multiple times in order for them to get the desired credits. Wouldn’t it be nice if you already knew the things that the banks will look for while approving your loan application so that you could get loans easily? Here we have listed all the points that bank consider while looking at your loan application before approving it:

1. Credit Score

The first thing any bank looks for in a loan application is the credit score. Your credit score will be calculated by the bank and if you have a high or passable credit score, your application will be reviewed further. However if your credit score falls below the minimum requirement, the application will be instantly rejected. The credit score is like the primary criteria to sort out the valid as well as invalid applications.

2. Credit History

The credit history is the second thing that every bank looks for. The credit history is basically the history of your previous loans and payments. In this all the late payments will be seen and calculated. Mostly any late payment above 90 day period can ruin your chance of getting a loan. Even if your credit score is passable, credit history is really important.

3. The Income

The banks want to give money only to the people or businesses that have a regular income so that the loan can be paid back. In case of a business that is established, the banks will want to know your business growth stats and the regularity of your income. Additionally, your income should be at least 40% higher than the monthly EMI that has to be paid to the bank. For the businesses that are just being set up, the bank will require you to show them your business plan. In such cases, the clients have to fulfill a lot of other formalities that differ from bank to bank.

4. Likelihood of default

The likelihood of default is when the person has either hone bankrupt in the recent past or has irregular income pattern. This is an instant no from the banks since most of them want committed clients that can pay back their money easily.

5. Past Behavior and Pending Loans

The past behavior of your account including pending loans, their EMIs and how your transaction rates have been is another factor that is considered by the banks. The people who have pending loans should have enough income to pay the pending loans as well as the EMI for the current loan.


Financial services at most of the banks have become much easier these days and if all of the above points in your loan application are clear; your loan will be approved in no time. However you should make sure to apply at trusted banks such as the Axios Credit Bank and use their Axios banking services.