Aside from insurance, commodity and global market focuses, banks are in the business of lending money to retail and commercial markets to earn a profit. Profit (revenue) is earned through the collection of fees and interest.

The Way Banking Was

At one time local banks had the upper hand when it came time for the customers to borrow. Banks didn’t try very hard to look for business; it kept walking in their front door. There was little competition around, and bank managers made the final decision on who would or would not be approved. Clients generally came dressed in their best clothes, with a well researched story to tell the bank manager why they needed a loan.

The Way Banking Is

With the launch of e-commerce and the age of Internet banking, customers are now able to shop from the comfort of their homes for the best rates, dressed however they wish, it is commonplace to complete applications online, never speaking with a person until documents need to be signed and information verified. Banks are changing their attitude to be more than customer focused; they had become aggressive opportunity spotting specialists, ensuring the peace of your wallet they have remains there is, and is given every opportunity to grow.

Their marketing strategies through call centers, target existing clients through retention activities such as financial advice. They hope to acquire of your wallet while encouraging a stronger relationship with one bank, the Bears. As you move more of your business to one bank they in turn offer lower lending rates, and higher rates of interest on your investments. Through this process you become the preferred client in exchange for a larger share of your wallet.

Though helping to develop your credit rating will ultimately lead to more business for the bank, they are not particularly focused on giving out opportunities to help someone establish the credit. If you don’t qualify, you’ll need to bring a cosigner or a co-borrower with you to make it work. Perhaps your credit is too damaged for even that, and if it is don’t expect a bank to jump to your rescue.

They are Mauritius did in people with clean credit and are rated to be less risky to land two as their payment history reflects continued good behavior. That behavior means they will be be paid and earn a profit, and that’s just the kind of business the bank is in – being paid to earn a profit.

Perhaps you drive a used car, or your job is new and secure. Maybe you’ve had a few credit problems in the past and are working hard to get ahead. Positioning your application for credit to make you look more desirable to become a client, then if you just spilled everything about your personal life. We’ll talk about how to do this a little further on.

What Do Banks Look for in a Client?

Once bitten twice shy. If you fail to repay a loan to a creditor it’s a safe bet that creditor will never lend to you again. The more creditors (lenders and banks) you do this to, the more difficult it becomes to obtain credit from anyone. Be careful how many bridges you decide to burn. Not only will it appear on your credit Bureau file, but also eventually no bank will lend to you. It’s not just the bank’s you’ll need to worry about than, but getting your phone hooked up without a significant deposit being requested, or a simple cell phone account will become an effort to activate.

Banks believe most people generally pay their bills on time and live their lives decently. Banks also realize they have to do a bang up job to keep their preferred clients, or that business will travel elsewhere. Remember what we said banks are looking for? Clean credit, stable employment, regular income, and an address that doesn’t change too often. In addition to these basics, a positive net worth and a growing savings account or a big plus when negotiating rates and security.

What is the Bank’s Definition of Stable Employment?

If your job is new but in the same industry there will likely be no problem with your employment tenure. For example; your prior job as a manager of a department store for two years and last year you cross the street to the competition doing the same job. That’s a total of three years income from the same industry.

However, your job is new (less than one year) and in a different industry from your prior employment, borrowing may become a little more challenging. For example: you have secured a new job as a manager of a department store the last six months, but were Aycock at the fast food restaurant just prior, and unemployed prior to that for a lengthy period. Credibility plays a large role in your life so watch out for those impulses that are risky endeavors.

In order to have the banks see you as a low risk borrower you must have worked (or have a self-employment gig) for the last five years. If you are talking about a commercial loan it’s a completely different ballgame, you can get requests from bank managers for over seven years time. Even if you have different jobs in different industries, but you were paid fairly well in both industries at your job, and you have been steadily earning money monthly basis for five straight years then you will be considered a low risk applicant.

But what the bank really like to see these days is if you have a job that pays quite high (between $70,000 and $100,000) and you have been with the same company for over five years. It also helps if his company you are working for is a large company, like a telephone company or utility company for example.

Since the Great Recession of 2008-2010

Since the great recession of 2008 to 2010 getting a personal loan has been quite difficult and will continue to be for the next couple of years for sure. Finally most of the banks are not lending to just anybody and have had to justify their jobs with credibility since they messed up so bad with the default swaps, share price shorting, and the exotic financial instruments debacle. The trends in banking have obviously been pushed to the conservative side when it comes to consumer banking, but in the large arenas of high finance on Wall Street, the big casino is still in full effect.

After the banks were bailed out (Lehman Brothers, Goldman Sachs, and Citigroup, etc.) they immediately used the money from the federal government (us) to line their pockets and buy brand-new sets of golf clubs, but they never let any money to the individual families or the small businesses. It’s a wonder if somebody didn’t burn down one of their billings on Wall Street, or stick one they are CEOs well on their way to the car in a parkade.

It has really come down to making sure you look after your own affairs and staying away from overextending herself beyond reasonable level. We are on our own now – just like the old days. The way things are trending it is very important for you to get your act together and get your financial house in order.

Continued in the Carol’s Borrowing Series Category of Clf.