Usefulness of Credit Bureaus for Lenders
- Better Lending Decisions: Credit bureaus provide banks, other financial and non-financial institutions with accurate, up-to-date and reliable information on lenders, to assist them make informed decisions in their lending activities. Lenders can now determine which borrowers are misleading, using their funds to service other loans, over-indebted already or borrowing with fake identification.
- Reduce Loan Processing Time: In the past, loan application processing used to take a lot of time due to the fact that lenders had to manually verify each borrower’s details. Now, all a lender needs to do is log into a Bureau’s database to check the details of a loan applicant.
- Determine the Terms of Loans: All the information on a credit report, like the pattern with which someone repays their loans or take a new one, help lenders determine how to fix the interest rate for a new loan. It also helps lenders to determine how many months or years they want to give the person to repay the money.
- Ease Debt Recovery: Since credit bureaus collate all credit information of a borrower without any bias, an individual’s credit report has become a better representative. A bad credit will prevent one from getting new loans, and this is enough motivation for anyone to pay back their debts.
- Improve Portfolio Management: Financial operators are able to manage their investments better with information from credit bureaus. The comprehensive and large amount of credit status of individuals/companies now available makes where to invest and who to choose as business partner(s) simpler to decide.
- Provide Risk Management Tools: Fraud and identity theft are common risks associated with the finance industry. Credit reports from credible credit bureaus assist in eliminating these issues. You can now tell when a loan applicant is lying about their financial details, or when they are trying to use someone else’s name to get a loan.
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