The term “Credit Check” refers to the process of checking the information and other details provided by the borrowers. Credit check is carried out by the lender before offering the loan to a borrower.Credit checking is quite necessary, for it enables the lender to ensure that the borrower has the resources to repay a loan. The lender, whether it is a bank or any financial institution, may carry out a credit check on its own, or it can engage some agency for the credit checking purpose.
A borrower is awarded a credit check score. This score is based on a number of factors such as borrower’s employment status, income, financial condition, and current bank balance. The borrower gets specific marks for all such decisive factors. Different banks and financial institutions can have different scoring system. The point is that a borrower has to score the minimum marks set as the limit by the lender.
One of the key objectives of a credit check is to determine a borrower’s financial dealings with the different financial institutions. That is why a large chunk of your credit check information comes from your bank statement and your record with the companies you have taken credit from. Apart from that, a credit check also includes your detailed residential address.
It is important for you to note that you have every right to check your credit file. And if you think that the credit check or a part of it is not correct, you may ask for clarification.
