Take care of your credit score for the credit underwriting process in banks

The credit underwriting process is mandatory when you apply for a loan. If you are not already aware of the procedure and the significance of it then you should learn that the credit underwriting process in banks takes place with the aim of assessing your creditworthiness. A lender is lending you the money but he has to make sure that this money could be recovered as well along with interest. Now there are a number of factors that are counted while deciding your fate regarding the loan. Among all these factors the most crucial role is played by the credit score that is a number on a scale of 300-900. Several factors can affect your credit score and cause it to dive down which could be detrimental for you, so here are some tips that will help you out.  

Tips to for a better credit score for the credit underwriting process: 

The first step would be awareness, the credit score despite being so important should not be taken lightly. You must understand how it gets affected and by what? This awareness regarding what helps you build a strong credit score on the digital lending platform. You should also find out what is the current status of your credit score, if it is ok then there is not an issue, but, if it is low then you must take a step.  

If you are using a credit card then you must be aware of the fact that any late payment could lead to taking your credit score down. You should not let that happen and you must make sure that you are making the payment on time without any hassle. This would help you build a healthy credit score for the loan underwriting process.  

If you are making too many credit enquiries within a short time then that can affect your credit score in a big way. You must consider this fact, the hard enquiries have a bad impact on your credit score and this could lead to disaster.  

Always stay aware and find out how to keep your credit score healthy, if you really want to get approved then you must consider following the tips mentioned above.  

Credit Risk Assessment With Alternative Data

 

The credit risk assessment procedure is all about assessing the creditworthiness of the borrower. Accessing a digital loan can be easier when you have a solid credit history to back you up. But that can be completely messed up if your credit history is completely messed up, or, worse is not there. The first-time borrowers do not have a credit history to back them up on the digital lending platform. Furthermore, things can truly get difficult for the people who are under-banked or, unbanked they do not have the sufficient document or, even credit history to back them up. This earlier would result in straightaway rejection. But things are changing and now people have alternative data to back them up.

The Role of Alternative Data in The Credit Underwriting Process:

So, basically what is alternative data?  The alternative data is not the traditional credit data or, does not emerge from any traditional source. Now that we have a ubiquitous digital presence, it becomes easier to get hands-on data, because we leave a digital footprint behind on the digital platform. We roam around social media platforms, use mobiles, pay bills digitally, do online shopping, through all of these activities data gets generated. This data actually holds the key to information and crucial information regarding our spending pattern and financial situation.

Now the situation gets smarter thanks to this alternative data make it easier for digital lenders to assess the creditworthiness of the applicants. They do not have to be at risk and the data gives them a clear idea regarding their customers. This enables them to understand whether a particular client is able to pay back the money he is borrowing, being assured he can lend the money and increase his business prospects and these people with no traditional credit history too can get the loans.

The alternative  data does play a crucial role in the loan underwriting process and soon it would be widely adopted.