Loan approval

March 29, 2019

Factors That Banks Consider While Approving Loans

Getting loans from any bank might sound easy. But it is not as easy as it sounds like. It is like the process of a product passing various quality tests before entering the market. The individual needs to clear a lot of obstacles to get a loan from the bank.

The banks before approving the loans take into consideration a lot of parameters. It is not that they are being strict, at the end of the day the person should be able to repay the loan with the particular interest amount. This is the reason why they check a lot of things before approving the loans. In this article, we will see some of the important factors the bank considers before approving the loans.

Credit history

The credit history is the first thing that the bank will consider before loan approval. The credit history refers to the proper repayment of EMI if you have borrowed loans earlier and proper payment of credit card bills. If you have a clean history, there are good possibilities that the loan will be approved. It would be great if the credit score is 800 and above, if not make sure that it is above 300.

Credit history


We all know that occupation plays a major role when it comes to loan approval in banks. If you are in a stable job, the banks will give more preference as you will have a stable income; hence there will not be any problem in repaying the loans. In this particular aspect, people working in private companies or who are self-employed have a lower preference. There are a few banks who also take into account the entire working history. It does not matter how much salary the person is getting. If they have constantly been changing jobs, then it is huge minus while getting loans.


When it comes to loan approval age plays a major role in it. The majority of the banks prefer the people between the ages of 30 to 40. It is because there are good possibilities that they will have a well-paying job and in the near future they will not be going through any kind of big expenses. The most important reason is their health. Their health condition can be trusted up to certain level. There are very fewer possibilities that they will have any major health issues which might cause death.


Spouse’s income

If your spouse has a solid and good income source, then the changes in loan approval are very high. They take it into consideration because they can depend on their spouse’s income if they are not repaying the loans properly. They also need to be clear that there is some sort of income source that is there to keep the family running. If not it is obvious that the loan repayment will not be proper.

Loan approval