Lender Requirements: The Basics You Need to Meet Before Borrowing

Thinking about a personal loan, mortgage, or credit card? The first thing lenders look at is whether you meet their requirements. Knowing exactly what they want can save you time, avoid rejection, and help you pick the right product.

Credit Score – The Short‑Term Ticket

Most lenders use your credit score as a quick health check. A score above 700 usually lands you better rates, while anything below 600 can raise eyebrows. If you’re not sure where you stand, grab a free copy of your credit report and see if any errors need fixing. Small tweaks—like paying down a credit card balance—can boost your score in a few months.

Income Proof and Debt‑to‑Income Ratio

Showing steady income is a must. Lenders typically ask for recent payslips, a tax return, or bank statements. They’ll also calculate your debt‑to‑income (DTI) ratio, which compares monthly debt payments to gross income. A DTI under 36 % is the golden zone; above that, you might need a co‑signer or a larger down payment.

Besides credit and income, expect to prove your identity with a passport or driver’s licence. Some loan types—like mortgages—require additional documents such as proof of residency, employment letters, or a property valuation.

When you apply, be ready with the following checklist:

• Valid ID (passport, driver’s licence)
• Recent payslips or self‑employment statements
• Bank statements covering the last three months
• Tax returns if you’re self‑employed
• Proof of address (utility bill)
• Details of existing debts (credit cards, loans)

If you’re applying for a specific product, the list might get a bit longer. For a mortgage, lenders also want your deposit proof and a valuation report. For a car loan, the vehicle details and insurance proof are added.

One common mistake is applying for several loans at once. Each hard inquiry can ding your credit score, making you look riskier. Instead, do a bit of research first, pick the lender that fits your profile, and submit a single, well‑prepared application.

Having a stable job for at least six months is another unspoken rule. If you’ve just switched careers, you might still get approved, but you’ll face stricter terms or a higher interest rate.

What about borrowers with a thin credit file? Some lenders offer “alternative” products that look at rent payments, utility bills, or even bank transaction histories. These can be a good way to build credit, but the rates are often higher.

If you’re a student or recent graduate, a guarantor can bridge the gap. A guarantor with strong credit and steady income can boost your chances, especially for larger loans.

Remember, lenders also check your employment sector. Certain high‑risk industries—like gambling or cannabis—might raise red flags, even if your personal finances are solid.

Finally, read the fine print. Some lenders hide fees in the “origination charge” or “early repayment penalty.” Knowing these upfront helps you compare true costs, not just headline rates.

By understanding these lender requirements, you can tailor your application, improve your odds, and walk away with a loan that fits your budget.