I once heard a banker who had worked in the industry for more than 50 years, tell me he had never seen a properly filled out loan application. He then said, “And I’ve never filled one out properly, either!” This cracked me right up. Last time I submitted a credit application, sure enough, I missed a few important boxes.
Today I hope to demystify the credit application with the hopes of helping others rock their loan apps.
First, the basics. Standard credit applications are divided into six sections. They are as follows:
(1) Credit Application
(2) Section A: Individual Application Information
(3) Section B: Join Application or Other Party Information
(4) Section C: Marital Status
(5) Section D: Asset and Debt Information
(6) Section E: Secured Credit
CREDIT APPLICATION
In this section, you will define for your lender the type of loan you’re asking for along with other pertinent information.
Your lender will want to know if you’re applying for a secured or unsecured loan.
A secured loan means a loan where you pledge some type of asset (like a car or house) as collateral for the loan, which then becomes a secured debt owed to the creditor who grants the loan.
An unsecured loan means a loan that’s issued without collateral, but is instead supported by the borrower’s credit worthiness. Bankers sometimes refer to this a signature or personal loan.
Next up in the credit application section, the application asks for the amount requested along with the term of the loan and the desired payment.
Lenders think of time in terms of months, so a 5-year loan is a 60-month loan because the borrower equates terms with payments. A 60-month loan means 60 payments over the course of five years.
Finally, inside the credit application box, you must enter how you plan to spend the proceeds of the loan.
SECTION A: INDIVIDUAL APPLICATION INFORMATION
This section asks you to enter your personal data, from your full name to your address to your driver’s license number to your social security number.
Areas of interest:
(1) Employer: Lenders want to know who you work for and for how long you worked. This gives them a general idea about the reliability of your income.
(2) Income: Of course, lenders want to know your position and title, as well as how Gross and Net salary per month.
Gross means
