There are a lot of rumors going around these days about loan companies and the checks they perform on potential borrowers. Some people say that employment verification is one of the main things that these companies look for, while others maintain that credit score is the key factor in their decision-making process. So, what’s the truth? Do loan companies really check your employment history? And if so, what other factors do they take into account?
What is an Employment Check?
As the name suggests, an employment check is when a loan company verifies your employment history and current job status. This usually involves contacting your current or previous employer(s) to confirm your dates of employment, salary, and job title. In some cases, they may also request additional information about your job performance or conduct.
Why Do Loan Companies Perform Employment Checks?
There are a few reasons why loan companies may choose to perform employment checks. One of the main reasons is to confirm that you have the income necessary to repay the loan. This is especially important for loans with large amounts or long repayment terms; in truth, loan companies simply want to ensure that you can repay a loan. If they have any doubts about your ability to repay, they may either deny your loan application or offer you a loan with less favourable terms.
In addition to confirming your income, employment checks may also be used to verify other information on your loan application. For example, if you provided an incorrect date of birth or another detail, an employment check can help to correct this information. Employment checks may also be used to verify your current address or phone number.
Do All Loan Companies Perform Employment Checks?
No, but most do. There are a few lenders who do not perform employment checks, but these are generally high-risk lenders who charge very high interest rates. At this point, we should say that employment checks are not the same as credit checks. A credit check looks at your borrowing history, while an employment check only looks at your current or recent employment situation.
This year, it’s time to remove the fear that comes with employment checks – those performed by Cashify Loans and other companies can actually help you in the long run. By ensuring that you’re currently employed and earning a regular income, lenders can be more confident in offering you a loan. With this, you’re less likely to default on your repayments and damage your credit score and financial future.
What If I Am Self-Employed?
If you are self-employed, some lenders may still require an employment check to confirm your income and employment situation. Thankfully, with self-employment becoming more common, many lenders are willing to work with self-employed applicants. As part of the employment check, you may need to provide tax returns, bank statements, or other financial documentation to prove your income.
An employment check is one way that loan companies can determine if you are likely to repay a loan. If you are employed, most lenders will require some form of employment verification, such as a pay stub or letter from your employer. If you are self-employed, you may still need to provide financial documentation to prove your income. Ultimately, the employment check is just one part of the loan approval process and lenders will also consider your credit history and financial situation before making a decision.