How Does a Lender Decide to Give You Credit?

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A lender decides to give somebody credit after looking at their credit score and their credit worthiness. Discover how basic credit cards are easier to obtain than auto loans with help from a registered financial consultant in this free video on credit and personal finance.

Part of the Video Series: Credit & Personal Finance
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Video Transcript

This is financial adviser, Patrick Munro talking about how does a lender decide to give you credit? A lender looks at a credit score and the credit worthiness of a borrower. It is not a personal decision, it is a business decision and there are straightforward benchmarks that make or break a credit decision. The methodology depends on what sort of an asset we are talking about. There is a lower bar to cross if you have basic credit card. There is a higher bar to cross if you are looking for an auto loan especially of an exotic nature if it is higher in price and there is even a higher rate if you are going after a home loan. So with this in mind lenders will look at your assets, your liabilities, how you paid your bills on time and of course the length of job and how much money you have coming in versus how much of bills you have and what that is is assets versus liabilities equals net worth and as long as you have a significant down payment towards the asset you are in good shape for a lender to decide to give you money. This is Patrick Munro talking about how a lender will decide to grant credit.

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