Credit Reports and Checks--The credit check is the favored tool of creditors all round the world, looking to check up on the credit credibility,Many employers also draw up credit report information of their employees before recruiting them, in order to form an idea about them....
Information on Credit Reports and Checks
When you have been refused a loan pointblank, think awhile before blaming the surly creditor. In fact, there are high chances that your creditworthiness is suspect and this is why you have been denied the money. And that “surly” creditor whom you are probably cursing under your breath has run up a credit check on you and come to the decision. It is not that he has some grudge against you.
The credit check is the favored tool of creditors all round the world, looking to check up on the credit credibility, credit score to be precise, of the prospective client before advancing loans to him. After all, the creditor needs to make sure that the money that he is tendering finds its way back to him. And for this he has to make sure that his client has some source of income or some asset with which he can pay back the money.
Now it is not only the banks and the creditors who take recourse to running credit checks on the loan seekers. Property owners also run a background credit check on the credit records of the prospective tenants, just to make sure that they would not make away without clearing their dues. Many employers also draw up credit report information of their employees before recruiting them, in order to form an idea about them.
There are many people who have credit checks done by credit-rating agencies on their own credit resources. These are probably people who have had an unpleasant experience with bad or low credit and are determined not to let history repeat itself. That is why they keep a watchful eye on their credit condition so that they can take immediate action if they find themselves loosening their purse strings too much or too frequently. This credit check is actually their form of reality check.
There’s also a breed of prudent people who would however like to keep a track on their credit resources at all times.
Now, if you are thinking of applying for a loan you need to keep in mind that the credit score that you rake up will determine whether you are deemed eligible for a loan. To elaborate, in USA, the FICO (Fair Issac Corporation) standard is used to measure the credit score. According to this parameter, your credit score can range between 300-850. While 750 is quite good, anything below 600 and you can start looking for alternative sources.
It is understood that people, the loan hunters to be precise, are quite in awe of credit checks. On the other hand, there is quite a misconception about the way in which the credit score is determined. It is usually believed that a sizeable bank balance will guarantee a healthy credit score. But the crux of the matter is that this credit score is based on sundry factors like timeliness of payments in the past, the duration of the credit history, the kinds of credits used, capacity used (the ratio of the present revolving debt to the available revolving credit) and the size and types of the latest debts.
A credit check is a way of comprehensively determining your financial position, so that creditors can lend you money with a light heart or you yourself take heart in the fact that you are not doing too bad on money matters.
By Expert Author: Carol Thompson
Article Source: http://www.articlesphere.com/
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