Smart borrowers are aware of the various factors that determine their allowable personal loan amount. If you know how much you can borrow, it’ll go a long way in preventing long-term debt, bankruptcy, and other financial frustrations. Cash Link USA is happy to discuss what contributes to the size and conditions of the loans you’re eligible to get.
Major Factors that Determine Personal Loan Amount
Many of our prospective clients come to us wondering how much money they can get. Some of them even ask if it’s possible to take out multiple personal loans. There are a lot of questions surrounding this topic, but there is a system that determines how much you can borrow.
Personal loan eligibility boils down to the following criteria:
- Credit Score
Everyone should know their credit score because it’s the major determinant for almost any kind of loan. Usually, this is the FICO score, which evaluates borrowers based on payment history, the amount owed, credit history, number of new accounts, and credit mix. A good FICO score starts at around 650, but stricter lenders might expect higher than 700.
- Income & Debt-To-Income Ratio
How much do you earn and how does it relate to your total debt load? This comprises a big proportion of your FICO score.
- Employment History
Consistent employment history (therefore, consistent income) helps your credit score significantly.
- Collateral Options
This is less pertinent to the lending we do, but if you ever pursue pawn loans or title loans, you can use your expensive assets as collateral to access bigger loans.
- Loan Type
Some loans are harder to get than others. Traditional bank loans have stricter standards, whereas you can get more from a lender like Cash Link USA for a slightly higher interest rate.
Understanding Income & Debt-To-income Ratio
The debt-to-income (DTI) variable is really important and bears more emphasis. You want to shoot for a DTI that’s below 36%. For example, you take your total monthly debt service (let’s say, $1,200) and divide it with your monthly income ($4,000) to get your DTI (30%).
The trick is to use debt so that you have a credit history, but not allow it to overwhelm you and exceed that threshold. Many consumers with a perfect FICO score (800) have a credit utilization of around 10 to 15%. They have a pattern of using debt, paying it off consistently, giving them a great credit score, and enabling them to access whatever loans they need.
Improving Your Allowable Personal Loan Amount
In a nutshell, the fastest way to increase your personal loan allowance is to improve your credit score. Along with increasing your income and reducing your debt, there are a few other ways to raise a low credit score.
- Pay all your bills on time (especially credit cards and other debt instruments).
- Don’t utilize greater than 30% of your credit limit.]
- Avoid making too many hard inquiries for new credit. This includes auto loans, new credit card applications, and mortgages.
- Consider debt consolidation if you have several active credit streams.
Cash Link USA: For Fast, Reliable, & Convenient Personal Loans
If you live in Missouri, Kansas, Texas, Wisconsin, or Tennessee, then we can help you gain access to fast cash through personal loans. We also offer installment loans and personal lines of credit. These three debt instruments cover a wide range of financial needs, regardless of whether you need a pipeline of funds or a lump sum of cash.
There are so many disadvantages to the bureaucracy of traditional bank lenders as well as the unreliability of payday loan companies. Cash Link USA has licensed in all the states we serve, which ensures that we’re fully compliant with state regulations and have an incentive to serve your interests.
Now that you know what factors determine your personal loan amount, feel free to contact us whenever you need fast cash from us.