Importance of good credit rating written by: Edanny Financial institutions have an obligation to give out loans to individuals, companies and the government. They also have a duty to ascertain the credit worthiness of those who seek loans from them so that they don’t lose money by giving individuals or companies like Line4Credit who have a history of not paying their loan in time or even defaulting.
They also check to see the capability of the borrower to repay back the loans given to them. This is done by going through their statements and even assessing the business from which the money to pay the loan will come from. If the individual is employed they seek a letter from the employer stating that the employee will not lose his job before the term of the loan is over and should they lose then the benefits that should be paid to the employee will be transferred to the loan account to clear their loan. Before any financial institution gives out loans they have to check the credit rating of the borrower.
For an individual, it is done by the credit officers of the financial institution. For Companies and the government they employ credit rating agencies to do the work. The credit rating is rated higher for those with good credit records, that is those who have no history of defaulting and have passed the test of their capability to pay the loan they are borrowing. A poor credit rating suggests that the borrower has had problems paying loans or is a defaulter and may have problems paying loans in the future.
Benefits of good credit ratings
Good credit ratings are very important to anyone with a desire to borrow. Loans are very important to individuals, companies and even the government. For companies to kick off in business they require loans,
the Government will also need loans from other countries and individuals need loans from banks in order to buy things like a car
land and to a small extent pay school fees for themselves or their children. In essence almost everybody will need a loan at some point in life. There are several benefits of having a good credit rating.
They also check to see the capability of the borrower to repay back the loans given to them. This is done by going through their statements and even assessing the business from which the money to pay the loan will come from. If the individual is employed they seek a letter from the employer stating that the employee will not lose his job before the term of the loan is over and should they lose then the benefits that should be paid to the employee will be transferred to the loan account to clear their loan. Before any financial institution gives out loans they have to check the credit rating of the borrower.
For an individual, it is done by the credit officers of the financial institution. For Companies and the government they employ credit rating agencies to do the work. The credit rating is rated higher for those with good credit records, that is those who have no history of defaulting and have passed the test of their capability to pay the loan they are borrowing. A poor credit rating suggests that the borrower has had problems paying loans or is a defaulter and may have problems paying loans in the future.
Benefits of good credit ratings
Good credit ratings are very important to anyone with a desire to borrow. Loans are very important to individuals, companies and even the government. For companies to kick off in business they require loans,
the Government will also need loans from other countries and individuals need loans from banks in order to buy things like a car
land and to a small extent pay school fees for themselves or their children. In essence almost everybody will need a loan at some point in life. There are several benefits of having a good credit rating.