Top 3 Facts About Online Loans You Need To Know Today

Top 3 Facts About Online Loans You Need To Know Today

Top 3 Facts About Online Loans You Need To Know Today

It’s no secret that the lending industry has gone through tremendous changes in the last decade. The rise of the internet has had a significant impact on how people borrow money. With all the changes going on, you may wonder if loans are now easier to access than before. 

Of course, the answer is yes! With digitization, you don’t need to visit a physical bank branch to submit your loan application. You can do it online within a matter of minutes and receive funds instantly. And it comes with multiple advantages, such as lower processing fees since the lender’s operational costs are reduced. Here, we explore the top facts about online loans you need to know today. Keep reading;

  1. A Higher Credit Score Will Have Your Loan Approved

A credit score is a three-digit figure that reflects your creditworthiness. Most lenders use it to determine whether or not to approve your credit application. Whether you want to apply with CreditNinja for an online loan for fixing an urgent car problem, paying for an emergency, or buying personal supplies, a good credit score will make it easier to get your application approved. 

You can get a free credit report from any of the three reporting agencies, including Equifax, Transunion, and Experian. Keep in mind that your credit score keeps changing because it’s affected by factors such as your credit history and payment of bills. 

Can you get a loan with a low credit score? Yes, you may, but it depends on your lender. Some lenders may advance bad credit loans to an individual upon meeting certain conditions, such as; 

  • Providing security for the loan may involve other processes, such as valuation. 
  • Providing a consignee or guarantor with a good credit history. It’s important to know that defaulting on the current facility could impact your guarantor’s credit report.

If you’re granted a loan with a low credit score, taking the necessary steps to improve your rating is essential. For instance;

  • Ensure you pay your bills on time by having reminders on upcoming payment dates.
  • Consider debt consolidation, which may reduce your loan installment to a manageable amount.
  • Utilize the 30% credit limit rule to avoid overusing your credit cards. Preferably, have only one credit card and avoid impulse buying.
  • Close open accounts that may be attracting unnecessary charges.
  1. Your Income Affects Your Borrowing Capacity

Different lenders have varying criteria for approving loans. However, a majority could consider the current debt status when determining whether or not to approve your application. Regardless of the reason for borrowing, your lender could likely ask for a list of your income sources. After that, they may compare it with your current debt status to determine your ability to pay. 

If you’re a salaried employee, a bank statement with regular remittances from your employer can provide proof of income. Alongside the statement, you may be asked to provide your salary stub, employer contact information, 1099s, tax returns, proof of address, and identity documents such as your driver’s license, state-issued ID, and passport.

3.A Higher Debt May Lead To a Decline

Your debt-to-income ratio (DTI) is a crucial factor that most lenders evaluate before approving your loan. If you have a high debt load, the chances of having your loan application approved may be pretty low. The reason is lenders often view high indebtedness as a greater risk. Not unless you have high-income levels that can support another debt, a high debt-to-income ratio could be detrimental to your future borrowing.

You can maintain a low debt-to-income ratio by ensuring your monthly debt payments are below 36% of your gross income. Even though there may be some exceptions, you can take the following steps:

  • Paying credit card balances in full every month and avoid taking new debts in the short term.
  • Pay your debts as soon as possible to lower your monthly debt payment and improve your financial position. 
  • Keep a safety net for emergency purposes.
  • Review your budget regularly, make adjustments and live within your means.
  • Check your credit report regularly to ensure there are no errors that may harm your credit score.
  • Maintain a lower credit utilization which means you’re using less of your credit limit, which is a good thing in the eyes of lenders. 
  • Increase your income by taking extra jobs, such as side hustles, as this can improve your borrowing ability.


Having a good credit score, maintaining a low debt-to-income ratio, and having a reliable income are all major factors in securing an online loan. Keeping these things in mind can significantly improve your chances of being approved for the loan you need. You can often play a role in improving your odds of getting approved the next time you apply. Review your credit report and keep your income-to-debt ratio in good standing.

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