With the credit crunch being reported daily many borrowers are sticking with their personal banks if they feel they have no choice but to take out a personal loan, but what do they look for before approving your loan.

When applying for a loan whether it is with your bank or through another lender they will consult a credit reference agency, the two main referencing agencies that providers use are Equifax and Experian.

When you apply for a personal loan your chosen provider will ask a referencing agency for the information they hold on you.

The information they provide to your potential lender is known as a credit report, each credit report varies depending on each individual it has details including court judgements, bankruptcies and details of your past and present credit agreements.

Your credit report also shows what applications for credit you applied for including credit cards and loans. It does not state if you were accepted, but if your chosen provider feels you already have too many credit commitments they may reject your application.

When your chosen loan provider receives this report they use this information to decide if they can accept the application, offer you an alternative deal or reject you.