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A Prerequisite For Loan - Credit Report
by Ruby Prezzo

Lending agencies are swamped with loan applications from
individuals, all of whom promise to repay the loan amount
fully, and in time. Given their resources of funds, and in
order to remain in the business of lending and earn good
profits, agencies have to take a decision on which loan
application to approve, and which one to reject. One of the
most important tools that they have with them today is the
credit report.

A credit report is required for any kind of loan - home
loan, educational loan, or car loan - and is now a standard
component of every loan processing. Through this credit
report, the applicant's past debt-payment record can be
evaluated, and any negative information, about non-payment
or delayed payment of past loans gets highlighted.

The applicant's credit report is an important analysis that
is statistically and dynamically generated. Every time a
person makes a credit purchase somewhere, the country's
computer systems record the transaction. Whenever the same
person pays up on that credit purchase, the systems again
record the transaction. A bank or a lending agency draws on
these systems for data on your transactions, and determine
if there were any defaults or delays in any of your
commitment to clear your dues.

Any non-payment of dues, or delay in installments of some
loan taken in the past, comes in the way of the present loan
application being approved. Officers evaluating the present
loan application immediately view your case with suspicion -
there is this doubt of whether the same incidents will be
repeated with their loan!

Delays in payments show that the person did have problems in
the past, but has at least made sincere efforts to meet
their obligations. Lenders look at such instances
sympathetically, and such instances in the past should
ideally not come in the way.

There are now online services available, some of them free,
which let one know about one's credit rating. Being aware of
this information allows one to understand about any
obstacles that might come in the way of obtaining that loan
that is being contemplated.

When you are not able to close a loan transaction by making
that full and final payment, or delaying paying that
installment, you are setting yourself up for trouble when a
similar loan requirement crops up in the future. It is
therefore, highly prudent to be on one's toes and ensure
that such liabilities are met at the earliest possible, so
that, that crucial loan in the future is approved with the
least hassles.

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