A credit report - A tool of measuring feasibility of a loan

What is a credit report? How is it important to you when you apply for a loan? Why is important? These are common questions that come to your mind when you think of a credit report.

The credit report is a tool the financial institutions use to judge and classify people according to their financial capability and history of repayments of loans. A credit report will also indicate whether the person in question is a person who is employable, and capable of a constant repayment schedule both financially as well as attitudinal wise.

A credit report is a report which shows in total detail the loanee's financial history right from the very first loan to the date he is applying for the last loan. The official organizations who are furnishing the loaning authorities your credit report will include in the report all your insolvency and/ or bankruptcy if any for as long as 10 years previous to the date of your application for the loan.

According to this credit report you will be awarded a number. The higher is that number, the lower will be your interest rates for the loan you are applying. Basically for a good credit or credit report score you need to get something around 630-650 points. Anything less and you are classified as bad credit - and hence you will get the high end of the stick, i.e. high interest rates with lower time budget for repayment of loans.

In other words, your loan application is squarely dependent upon the scoring done by the credit report. The financial institutions through the credit report will be able to judge your financial inclinations and capacity through the details furnished. In order to have a good credit report, you would have not only constant in repayments schedules, but also settled in total all past loans. The feasibility of a loan, according to the credit report, will be based on whether the applicant can sustain a continuous solvency over a sustained period of time.

Michelle Herring is a loan and credit expert and a partner in the firm of www.expertloanandcredit.com