Applying for Credit

How much of a risk is it to loan money to you? Creditors will want to know. A creditor is someone who is in the business of lending money. These people make money from the interest they charge you on the loan. Before they lend you money, they want to make sure you are likely to be able to fulfill your promise to pay back the money. When you want credit, you will have to fill out an application for it. The creditor will make a judgment about your risk level based on the information you give them.

The first thing creditors will look at is your income. They will want to know how much you make each month. If you have other sources of income, such as rent that is paid to you or child support, these should also be listed on the application. The credit application will also ask you to list all your expenses. These include your rent, car or other loan payments, utilities, and other amounts you pay out each month.

Creditors subtract your expenses from your income. This is the amount of money you will have left to pay back the loan. They figure out whether or not you will have enough to make the payments. This is the biggest factor in deciding if they will give you credit.

Your age is also a factor in determining your credit risk. You must be at least 18 years old to be responsible for your own debts. Usually, they will not lend money to people younger than that.

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