When you apply for unsecured loans or any other form of credit for that matter, you are asking someone to invest in you. They will want to get their money back and with interest which effectively acts as their profit on the deal. They are not looking just to give you the money and forget about it which sounds a silly thing to say but unfortunately, many lenders have had their fingers burned in the past by lending money to people who have not really thought long and hard enough about how they intend to repay the money. This has led to many people to default on their loans and cause the lenders to be much more wary about who they lend to in the future.



Of course, the lenders also have a responsibility to ensure that they only entertain applications for loans from people who can realistically afford to repay them. This is why they run a number of checks during the application process to help them to assess your suitability.

Unsecured loans and tenant loans do not generally require security. In other words, unlike secured loans and mortgages, the loan is not secured against property, which means that in the event of the customer defaulting, the lender cannot force a sale of the collateral used in the deal in order to recoup the money they provided. Unsecured or tenant loans can sometimes be known as personal loans, therefore require fewer legal checks for things like independent property valuations, local authority searches, involvement from solicitors and other outside agencies in the process.

The lender may require one or more of the following however:

- Proof of citizenship. The lender will want to know that you are a UK citizen which means that there will be a lower risk of you absconding with their money

- Proof of residency. You will probably need to show the lender proof of where you have lived in the last three years. Again, stability is often important to them because they would be more concerned about someone who continually moves home every six months compared with someone that has remained in the same house for ten years or more because they are less likely to lose track of that person and more importantly, lose track of their investment

- Proof of income. The lender will probably look at your income to the household and the regular outgoings that you have to pay each month. They take a realistic view of what is likely to be left over to repay their loan to you

- Employment history. They will want to know that you are stable in your employment to protect your income in order to be able to repay the loan. If you have changed jobs many times each year for the last three years, there is a much greater chance of you having a problem in the future which may jeopardise your repayments

- They will also run a credit search on you which will show them how many applications for finance you have made and your repayment history including any late payments, arrears and defaults. This gives a very clear indication of whether you may be considered a good risk or a bad one.

- Unsecured loans, tenant loans and personal loans are a great way for many tenants to raise the finance they need but before you apply, be realistic about the risk that you may pose for a lender. Always be honest with yourself and choose a lender that specialises in that level of risk. In this way, you will have much more chance of success and fewer disappointments along the way.

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