How Do Banks Access Your Credit Rating

Dr Watson Goh By Dr Watson Goh, 14th May 2011 | Follow this author | RSS Feed
Posted in Wikinut>Money>Loans

Interested in knowing what the banks look for when reviewing your loan application ? or accessing your credit report ? Then continue reading..................

Applying method of Finance

Finance is necessary for maximum business men but a least of them are know about the method of applying it. When you need finance, you have to apply through official application to the financial institution. Bank overdrafts and loans are the most important source of funds for small business.

Any bank does not give money blindly. It gives money on the basis of information supplied by you. So you should give the information clearly and in detail. It should create a positive impression on bank.

What does the bank look for ?

Through various means bank search for the ability to repay the debt in all business men. So you should have most confident in your presentation so that bank will believe you. You should create confident in bank saying that your application is practical and your business have the adequate ability to serve all the borrowings. You have the interest to repay the loan, should reflect in you. You can take the help of your accountant.

Banks look at several factors when assessing a business loan application

Bank will observe multiple factors like, about the amount of money you required and the cause of requirement. You should remain careful about the amounts of money you borrow don’t take lightly.

It may ask you about the extra alternatives you considered. The alternatives may be reducing costs, tougher debtor terms, and capital injections from partner

It will need a clear business plan or a plan meant for service and repays the debt from cash flow.
You should have record of success.

It also does inquiry about your contribution and security.

Requirement of finance

A majority of business men are required loan for the starting of the business and need extra loan for the maintenance and development of the business. So at the starting phase the internal finance resources are become fatigued.

Funding is very necessary for the business. It is required for many purposes, which are described below:

Fund mainly required buying capital substances

It also helps to raise assets of trading stock and supplies;

It is required to fund for investigation and progress and for expand new markets

Various types of finance are also available for funding the business. Debt finance is one of the finance which offers subject to specific terms and conditions for refund. Overdraft or bank loan is debt finance. Another type of finance is also available named equity finance. The investment process in equity finance is more complex and time consuming.

moderator Mark Gordon Brown moderated this page.
If you have any complaints about this content, please let us know


Add a comment
Can't login?