C. Lending Restrictions

On the whole, your credit report should reflect the information that a lender would take into consideration but there are some differences:

 

>Lenders may see electoral roll details of everyone who is currently registered at your address.

-Your report will only show your name and the dates you have been registered.

>If you have court judgments you will be provided with the court and case number but lenders will not.You will see which organizations provided the credit reference agency with information.

-For example, if you have a credit card, the name of the credit card provider will be shown but the lender will only see the type of organization that provided the information e.g. bank.

>Only full credit applications should be seen by lenders whereas you will be provided with all searches made of your credit report.

-These may be called “unrecorded inquiries , “identity searches” and a record of the fact that you have looked at your credit report.

>One important difference is that lenders may see the credit report relating to anybody you have a financial connection with and take that information into account.

-You will only see a list of the people you have a connection with and only they can obtain a copy of their credit report. If a financial associate has had late payments in the past, this could affect a lending decision made about you.

>Not all agencies will provide you with the information held at linked addresses or other names you have been known by unless you provide these in your credit report application form.

-Lenders will be able to see these so it is important that you apply for your credit report with as much information about yourself as possible.

>Remember that not all organizations are entitled to see all the information held about you. Companies who are not part of the credit reference agencies account sharing scheme will not be able to see credit accounts provided by others.

 

B. Lending Criteria

Each lender will have their own lending criteria. The criteria are the rules that the mortgage underwriters will follow when they assess a mortgage application. The lending criteria for each lender will be quite detailed.It talks about the things that lenders take into consideration and other information needed for the application.

• You have a good credit history and have made payments on time in the past.
• There are no court judgments or bankruptcies.
• You are not over-indebted
•  You do not already have too much credit and that by lending you more; you may not be able to pay all the money back.
• They can prove that you are who you say you are
•  There is enough information about you to confirm that you have lived at the address..
• There are no indications of fraud.

 

A. Lending Decision

Every  lending  institution  has  a  set  of  credit  standards  or  guidelines  that are used  to  analyze  and  approve  loans. Centralized lending decision is one of the significant changes in today’s lending environment.

It is very important for the lenders to think seriously as to decide whether to accept or decline your application. However, the combination of a credit report and lender’s own criteria are the basis of lending decisions.

To help the customers better understand the decision-making process for approving  and  renewing  loans,  most institutions  commonly  refer  to  these  standards  as  the Five  Cs  of  Credit  —  character,  capital,  capacity,  collateral,  and  conditions.

Character

Every  lending  decision  must  answer  a  basic question:  Is  the  customer  of  sound  character and  does  he  or  she  have  the  management capability  to  run  the  operation  and  repay  the loan?

Capital

The borrower puts toward a potential investment, because a large contribution by the borrower will lessen the chance of default.

Capacity 

It is  the  customer’s  ability  to generate  sufficient  earnings  to  sustain  current obligations,

Collateral

 Such as property or large assets, helps to secure the loan

Condition  

Conditions of  the  loan  also  include developing  an  appropriate  repayment schedule.  On  short-term  loans,  considerations include:  source  of  repayment,  timing  of repayments,  and  amount  of  repayments.