Getting a Loan - The Homer Fund

Study ObjectivesUnderline/highlight theanswers to this question asyou read:1. What type of informationis needed to complete aloan application?Applying for a LoanBefore you are ready to apply for a loan you should order andreview a copy of your credit report. Review Workbook 3:Understanding Credit and Your Credit Report for an explanation ofthis process.There are a number of steps in the loan application process. Thefollowing diagram outlines the steps to arriving at a loan decision.Applicantcompletes loanapplicationApplicantsubmits loanapplicationApplication reviewedby financialinstitution using thefive C’s of creditLoanDecisionCompleting a Loan ApplicationTo gain access to credit from a lending institution, you must complete a loan application.Lenders use loan applications to collect information about applicants. They collect informationthat will help them evaluate the applicant’s ability to repay a loan. This information usuallyincludes the following:• loan purpose: What is the applicant going to use the money for?• repayment history: What is the applicant’s credit history?• repayment sources: How is the applicant going to repay the loan? What is the applicant’sincome? Savings? Are there any co-applicants who will be pooling resources?• other debts: Does the applicant owe any other money? Are there any other loans thatthe applicant will be paying off at the same time, using the same repayment sources?Loan applications can take some time to complete. Every loan application asks for similarinformation, as well as authorization to get a copy of your credit report.The following information is necessary to complete a loan application:• name and Social Security number;• address and length of time at the current address;• place of employment and length of time on the job;• monthly income from all verifiable sources;• monthly expenses;• all debts (e.g., loans, credit cards), including the lender’s name and the account number.If you apply with a joint applicant, similar information will be needed from both people.Some additional information may also be requested during the loan application process, such as:• pay stubs covering the past 30 days;• copies of your income tax returns for the past two years;• paperwork that shows the cost of what you are buying, if you are borrowing to make apurchase.14When you complete your application, be honest and forthcoming. Provide complete and