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Understanding your Credit Report: What Lenders look for in a Borrower

2023-10-17 10:10:49

Understanding your Credit Report: What Lenders look for...


Lenders, such as banks and various credit card companies, use credit reports to determine an individual's creditworthiness and the likelihood that they will repay a loan or credit card balance on time. Other entities, such as landlords and employers, will also use the credit reports to make decisions about renting an apartment or hiring an employee. 

As a detailed summary of an individual's credit history, a credit report contains information about an individual's borrowing and payment habits, including credit card usage, loan repayment history, and other financial obligations.  

What Does Credit reports typically include personal information, such as the individual's name, address, and social security number, a list of credit accounts, the amount owed on each account, and payment history. Credit reports may also include information about bankruptcies, tax liens, and other public records related to an individual's financial history.  

In today's credit monitoring or digital credit management apps allow users to access and discuss their credit reports with other users or financial professionals. Such apps can give users real-time access to their credit scores, alerts for changes to their credit reports, and tools for managing their credit. 

Some credit personal discussion apps may also have community features that allow users to ask questions, share tips, and discuss credit-related issues with other users. It can be helpful for individuals who are looking to improve their credit scores or want to understand their credit reports better. 

Some video and credit PD apps for NBFC may include video content, such as educational or informational material related to credit reports and credit scores, such as tutorials or explainer videos. However, the primary focus would still be delivering written information about credit reports and management. 

Lenders typically look at various aspects of your credit report to assess your creditworthiness and also determine whether or not to approve your loan application. Below mentioned are some of the critical items that lenders look at on your credit report:  

  1. Payment History: Lenders will review your credit report to see if you have a history of paying your bills on time or have any late payments or delinquent accounts. They will look at your repayment habits in the past and decide whether it will be a safe deal to lend you money at present or shortly.  
  2. Credit Utilisation: Lenders will also examine how much of your available credit you are currently using. Higher credit utilization may suggest that you are overextended and may be at a higher risk of defaulting on a loan.  
  3. Length of Credit History: Lenders will consider how long you have had credit accounts open. A more extended credit history can demonstrate more stability and responsible credit management. It is also linked to a 15% increase in your credit score.  
  4. Types of Credit: Lenders will look at the mix of credit accounts you have, such as credit cards, loans, overdrafts, and mortgages, to gauge your ability to manage various different types of credit.  
  5. Recent Credit Inquiries: Lenders will note any recent credit inquiries on your report, which may suggest you actively seek new credit and potentially take on additional debt. 

Overall, lenders will look at your credit report to assess your creditworthiness and also determine the risk associated with lending to you. To gain more information on credit reports and lenders' preferences, contact Credility today. 

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