Lenders have been using credit reports for evaluating loan applications since 5 years now. But it is only now that people are realizing the importance of being aware of their credit scores and maintaining their credit history. Analysing your credit report helps you identify the right time when you should apply for a loan in your financial life cycle thereby increasing the chances of it not being rejected. The main factors seen upon by the creditor while analysing your application are :
New credit facilities
If a creditor sees that recently you have been given a number of new credit facilities, it would indicate to your lender that in relation to your EMIs, your monthly outflows have most likely increased. Thus, it is likely to have a negative impact on your loan application.
Chances of getting a loan approval are most likely to suffer if you have applied for many loans at the same time in the recent past. Such behavior gives you the “credit hungry” tag by the lenders and indicates that you may be in urgent need of money. This will make creditors more cautious when they are evaluating your application.
Payment history
There are two parts to your payment history- DPD (Days past Due), and the month, year of payment of year. DPD indicated that the payment is late by how many days in that month. “000” – anything other than this would be considered negative by the creditor. Up to 36 months of this payment history is provided in this part with the most recent month shown first.
Current balances
Current balances also appear in the account(s) section. Current balances on your various loans show the depth of your debts. Sum of these current balances then helps the creditor determine your ability to take on more EMIs, in relation to your current income. Naturally, the lower is your current balance the better are your chances of getting a loan approved.
Get your loan approved by just improving your credit score.
consult credit therapists at www.cibilconsultants.com
Source: Secondary
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