Yes, you should care about your credit status before applying for the loan because it is the key factor that decides the approval or rejection of the loan application. Lenders offering financial services do check the credit report of the applicants to understand their credit worthiness in the lending market. Credit file contains almost all the credit transactions of the applicant that he/she did in the past few years. It is the one that tells lender were to trust the applicant with the repayment or not.
Credit Status – Introduction
Credit status is the description of the credit report of an individual that is designed by the credit agencies. There are three main bureaus that make the report of by collecting credit information about an individual from different sources. The source of information is different then it is possible that they give different credit status to the one individual. That is the reason, it is suggested to everyone to check their credit report from every agency time to time to avoid any mistake or error and to be updated by their credit rating.
Importance Of Credit Status While Availing New Loan
Lenders always check the credit status of the individuals to understand the risk borrower pose to them. Credit report plays a very important role while deciding about the loan approval that is why it is necessary fro individual to check and understand his/her credit status before applying for a new loan. A credit rating is important while availing loan because:
• It Tells The Credit Worthiness
Importance of credit report is that it tells lender about the credit worthiness of the applicant. It helps lenders to understand the way applicant has paid back his/her previous loan. Credit status having blemished records like late payment, defaults, arrears, etc. will be considered as risky and get disapproval from many lenders. This is because lenders believe that applicant having stained records got the tendency to repeat their mistakes. So, it is vital to check the credit report before applying for a loan in order to make sure that you will get the approval without facing any hassle.
• Assist In Understanding Applicants Repaying Ability
It also tells the current financial situation of the applicants which assist lenders with analysis applicant's repaying ability. Current income, funeral expenses and current debts with their installments helps lenders to know the amount that is affordable by the applicant to repay the new loans. They usually look out from income to debt ratio to understand things in a better way. So, it is important to check your report in order to ensure that your settled debts are removed that can create problems while acquiring new loans.
• Helps In Getting A Good Term Deal
Do keep in mind that, terms of the loan deals are decided after analyzing the credit report of the applicant. If applicant got a good credit rating them he/she are eligible to get flexible terms and affordable rates. And, if they got a bad rating then they have to bear the high interest charges that could be burdensome.
So, try to fix your report before handing your details to the lender for a new loan.These are the few points that show the importance to care about the credit status before applying for any financial service.
