What a Bank Loan Review Entails

A bank loan review determines if you qualify for a loan and what the terms of the loan will be.

What to Expect

Lenders look at three main components during a bank loan review:

Credit
Employment
Personal references

When it comes to considering a new or existing customer for credit, banks have a set range of both credit scores and credit amounts that they can approve for each credit score. A low credit score and a Thin File are different. A Thin File means that you have not established enough credit history to be considered for a non-secured loan, a loan with no collateral to back it up, such as a personal loan. Having a Thin File is worse than having bad credit.

Your credit score is not the only thing that is checked. Lenders also do credit-utilization checks. Credit utilization is an applicant’s ratio of available credit to used credit. A credit-utilization check involves checking with the big three consumer credit reporting agencies (Transunion, Equifax and Experian) to determine your standing. The check can be used to approve or disapprove a personal loan above and beyond credit score. If you have a credit card with a $500 limit and a $250 balance, your credit utilization is at 50%.

While reviewing your bank loan, banks will also look at how much credit you have applied for recently. Too many recent inquiries can hurt your chances of getting your loan approved.

What a Bank Loan Review Entails

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