Question

Why are job security, credit history, and debt-to-income ratio so important to lenders when considering people for loans?

Answer 1

Job security is how likely an individual will keep his job, this factor will determine if the person has a constant and secure money income. Credit history is the individual's ability to repay debts and it demonstrates how responsible the person is. Finally, the debt to income is how lenders measure the individual's capacity to manage their payments.

Therefore, all these factors are important because they all measure the individual's capacity to pay their debts.

I hope you find this information useful and interesting! Good luck!

Explanation:

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Answer 2

These are important parameters that give signals of an individual's ability to repay the loan. This is an indication of the financial health and profile of the payer, which serves to give lenders insight into the borrower's conduct and repayment potential. Thus, the more information lenders have about borrowers, the lower the risk of default. Banks often use all this information and more when it comes to lending.