Acquiring a bank secured loan is not always as simple as some individuals may think. Merely because you have good credit doesn’t guarantee approval. Several distinct elements are seen as part of the large picture, and though your credit history definitely plays a part in this chain of events, it is not the only thing that bank considers. How essential each factoring item is depends on the loan officer and the bank.

Effect on your credit rating: Your credit history is one of the initial elements that a loan company considers who you apply for a bank secured loan. Some factors, obviously, will have a lot more impact than other peoples will. These elements will even vary from bank to bank, but there is no doubt to the truth that your credit rating is the very first factor that can affect your application for a bank secured loan.

Job balance and longevity: For those who have bad credit, but you have a well balanced history of employment with job longevity, the impact on the application will be less than if you have bad credit with an unstable occupation.

This is specifically true for those who work within an industry that has consistent layoff for example the automotive or construction business. Bank officers understand that if you’re not working or only being paid a portion of your usual pay some credit issues will develop.

By showing employment stability, you are showing the lender that you are a responsible person who just ran into some difficulties along the way when it comes to your credit.

Type and condition of collateral pledged: A secured bank loan implies that there’s some kind of collateral pledged by the borrower to secure the loan. This can be a vehicle title, second mortgage on your home, securities of some type which are fairly liquid in nature, or a savings account or CD at the bank where you acquire the loan.

The more liquid the asset which is pledged, the much more likely you are to receive the loan, particularly if there are credit issues. The collateral preferred for a bank secured loan is property, with a home being the first choice and a vehicle title the second choice.

The reason behind these items being preferred is that they are simpler to obtain and sell in the event the loan goes into default. Property is preferred over employment stability simply because many areas throughout the civilized world do not allow wage garnishments for anything aside from child support payments.

Final determination: Before the financial institution makes a final decision, he will consider your credit report, job stability, and the type of collateral you’re pledging in order to assist him in making his final decision regarding your bank secured loan. He will create a decision based on everything and not on just one item, even though if you have poor credit in combination with deficiency of job stability, those will have quite a detrimental effect on your application and may trigger the loan to be rejected unless you have sufficient collateral to counteract those unfavorable elements.

Don’t instantly assume your scenario means your loan will be declined but instead sit back and speak to the lender and find out what your choices are.

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