People may assume that having debt is sometimes stressful, but so is lending money to other people. Any loan involves some measure of risk to both parties, and that is why credit providers put so much emphasis on the assessment of those who apply to them, and also on the decision to approve or reject an application. The task of lenders is made easier by the use of credit data solutions.
The examination always entails scrutinizing the past debt of the company or person submitting the application. Financiers want to have information on what other debts the applicant has, or has had, what amounts are or were involved and why the lending was necessary. They also want to be satisfied as to the applicant's payment profile. Are there bad debts? Is there anyone who wasn't paid? These enquiries have to be resolved, regardless of whether the other party describes them as undesirable.
The other side of the assessment is based on the verification procedure. Financial institutions need to confirm that people are who they say they are, work where they say they work and earn the stated income. This is not only about the applicant's ability to repay the debt but is also done for obvious security purposes.
All of this information about applicants (consumers) is called credit data. Because it is so personal in nature, relating to financial activities and personal identity, it is usually protected by law and hard to access. On the other hand, consumers sometimes try to prevent financial institutions from obtaining it. Lenders therefore need to have a trustworthy source of such information.
There are subscription-based services who are able to provide such information. They are legally allowed to offer this service, even though subscription is not free. These credit bureaus administer databases of consumers and their track records. Financial institutions are permitted to purchase records if they have been authorized to do so by those applying for finance. There will always be text to that effect on the application form.
In deciding who to use to provide this information, financiers should take note of several points.
Firstly, the quality of the data. How extensive is it? Is it reliable? Bureau reports should give accurate dates and figures and also be prepared to inform their customers as to the sources of their information. There should not be errors as this can prejudice not only the lender's decision but also the consumer's ability to be approved for finance.
This is associated with the second issue: integrity. What security measures does the data supplier use? How hard is it for consumers to adapt or destroy their details? Data providers should have a considerable reputation in the industry. They should not easily release reports or allow alterations to their records.
Third, how representative is the database? What share of the market does the data supplier cover? If a supplier does not have a large enough database, it cannot satisfy the enquiries of its clients on a regular basis.
The bureaus are sometimes criticized by consumers as obstructing successful credit applications. However, the bureaus are important in that they help to reduce bad debt and in doing so protect the viability of the industry.
The examination always entails scrutinizing the past debt of the company or person submitting the application. Financiers want to have information on what other debts the applicant has, or has had, what amounts are or were involved and why the lending was necessary. They also want to be satisfied as to the applicant's payment profile. Are there bad debts? Is there anyone who wasn't paid? These enquiries have to be resolved, regardless of whether the other party describes them as undesirable.
The other side of the assessment is based on the verification procedure. Financial institutions need to confirm that people are who they say they are, work where they say they work and earn the stated income. This is not only about the applicant's ability to repay the debt but is also done for obvious security purposes.
All of this information about applicants (consumers) is called credit data. Because it is so personal in nature, relating to financial activities and personal identity, it is usually protected by law and hard to access. On the other hand, consumers sometimes try to prevent financial institutions from obtaining it. Lenders therefore need to have a trustworthy source of such information.
There are subscription-based services who are able to provide such information. They are legally allowed to offer this service, even though subscription is not free. These credit bureaus administer databases of consumers and their track records. Financial institutions are permitted to purchase records if they have been authorized to do so by those applying for finance. There will always be text to that effect on the application form.
In deciding who to use to provide this information, financiers should take note of several points.
Firstly, the quality of the data. How extensive is it? Is it reliable? Bureau reports should give accurate dates and figures and also be prepared to inform their customers as to the sources of their information. There should not be errors as this can prejudice not only the lender's decision but also the consumer's ability to be approved for finance.
This is associated with the second issue: integrity. What security measures does the data supplier use? How hard is it for consumers to adapt or destroy their details? Data providers should have a considerable reputation in the industry. They should not easily release reports or allow alterations to their records.
Third, how representative is the database? What share of the market does the data supplier cover? If a supplier does not have a large enough database, it cannot satisfy the enquiries of its clients on a regular basis.
The bureaus are sometimes criticized by consumers as obstructing successful credit applications. However, the bureaus are important in that they help to reduce bad debt and in doing so protect the viability of the industry.
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