How digital lenders evaluate borrower eligibility

The shortcomings of traditional credit scoring methods are now painfully clear in the ever-changing world of financial services. Although traditional methods were once effective, they now fail to capture the full financial picture of borrowers, leaving many creditworthy individuals behind. The demand for alternate means to determine borrower eligibility has grown as we move toward a more connected and digital environment. Hurray technology!

The foundation of traditional credit scores is past history from credit bureaus, with an emphasis on factors like prior credit utilization, payment history, and outstanding debts. Although this method has been the norm for many years, several shortcomings make it difficult to appropriately evaluate present-day borrowers. As an illustration, it might miss those with poor credit histories, recent immigrants, or people who choose to use cash instead of credit cards, leaving them with unmet needs and shut out of the lending ecosystem. Too limiting if you ask us.

Digital lenders seized the opportunity to rethink borrower assessments after spotting flaws in traditional credit scoring. We’ve enhanced loan eligibility with advanced technology and data analytics for a more comprehensive approach. They bridge the gap and provide financial opportunities to those overlooked by traditional institutions by redefining loan eligibility criteria. We did a thing, didn’t we?

Now that you know we’ve expanded the playing field, we’ve curated 5 key factors beyond credit score you must know about before applying for a loan.

Digital lenders recognize a borrower’s steady income and employment history as signs of their ability to manage finances. A steady income indicates the borrower can likely repay the loan on time. An individual’s employment history also shows their job stability and growth, affecting their ability to repay debts.

Digital lenders take a more thorough approach by examining the borrower’s cash flow, compared to traditional lenders who mostly rely on credit scores. This involves reviewing earnings and expenditures over a set period, usually using bank statements and financial records. This helps digital lenders understand a borrower’s spending habits, financial health, and cash flow by examining inflows and outflows. This evaluation allows us to determine whether one can handle loan repayments in addition to other financial obligations. See why we require a bank statement?

An individual’s intended use for a loan is a significant aspect of the evaluation process. Risk and potential repayment vary depending on the purpose of the loan. For instance, a loan sought for urgent medical care may have different risk considerations than one meant for business expansion. To match loan terms with borrower needs and reduce default risk, digital lenders consider the loan’s purpose.

The repayment history of borrowers who have a preferred digital lender carries a lot of weight. Reliability is shown through timely payments, boosting the borrower’s chances for future loans with better terms. This focus on past behaviour encourages a cooperative connection between the lender and the borrower. Long-term relationships are not built in one day. Start one with us today.

Our digital footprints are everywhere

Through a person’s online activities and interactions, people leave behind a significant digital footprint. Digital lenders sparingly implore this information in their review process. Lenders assess a borrower’s actions, reputation, and creditworthiness through their online and social media presence. Showcasing responsible financial practices and boosting creditworthiness can be achieved through a strong online presence. A lender who’s not scared to lose money to a ghost is likely to be a loan shark in disguise.

This shift from relying solely on credit scores enhances the accessibility and inclusivity of financial services. It enables lenders to serve a wider range of borrowers, including individuals with unstable financial circumstances or little credit history.

One loan after another we are providing chances to those previously underserved and considered not creditworthy by traditional banking institutions.

Send us a message at support@irorun.com and get started on your first loan today!