Few days back, when the loan market was completely depended on hardcopy of documents, trust issues and recommendations, the plethora of hassle that had to be taken by both the lenders and the borrowers were uncountable. The borrowers had to prepare tons of documents for applying for the loan. They had to run to the lenders for more than months and then even they could not be sure that are they going to get approval for the loans or not. The lenders used to give loans towards the people who have a very good cash flow or income. So, the loans were only accessible by the rich people. The problems form the lenders end, cannot be ignored as well. They also had to bear a lot of problems. Since, there were the trends of hard copies of the documents submitted for the loan application, the bad credit nation21 loan lenders had to be very much careful about the forging of the documents. Thus they had to verify the documents twice, thrice or sometimes even more than those times.
They had to go to neighborhoods of the people or call in door to door for identifying the loan applicants’ honesty about what they have claimed in the documents, even, after all these procedure, they could not be sure about the repayment of the loan as still there could be chances of document forgery and identity theft. On the other hand, since the loan qualification systems were not automated, the lenders had to bear the blame of providing loans towards a wrong person by themselves. That is why; they used to be very strict. At the same time, for their strict rules, it was almost impossible for any medium earning people or middle class people to obtain loans for themselves. specially people were very much reluctant to seek for loans for their personal issues. With the arrival of Credit Rating & Lending Online, the total scenario has been changed upside down. People who use to be reluctant to seek money, now thinks about taking a loan over petty personal problems.
So, let’s get to know that how these great changes were possible.
The credit rating system describes the borrower’s type:
The credit rating system was invented and came into continuation before 1980. Before, we get to know that how credit sore actually describes the type of the borrower, let’s obtain a basic idea about what is credit score.
The credit score is actually a number that briefly describes the type of response of an individual towards his or her loan responsibilities. It is a special kind of numerical expression through which you will be able to understand how one deals with his or her financial responsibilities. There are several countries that use the credit score or the credit rating now to understand the type of the borrowers. For example: USA< UK, Canada, Australia etc. all economically leading countries are using these system to identify the type of a person when it comes down to deal with the financial obligation. Almost all kind of financial obligations are recorded on the credit reports. For example: it will record your loan obligation like how many loans you do have, do you pay them regularly or not, or you’re the regularity of your payment of utility bills, medical bills, insurance premium etc, wherever you have any financial obligation, it would become recorded on your credit report and thus it will have an impact on the credit score you have. If you oblige all your financial duties very well, then you will have a good credit score, and if you make a lot of mistakes in these responsibilities then you will have to face the consequences of having a bad credit score.
A money lender can identify the creditability of a borrower from the credit rating. The credit score is measured on a scale of 100 to 1200. A credit score that is lower than 600 is usually recognized as a very low score. On the other hand, a credit score that is higher than 800 is assumed a high score.
Now, that you have got the idea that what is a credit score and how it describes the type of the borrower, let’s also get to know how it eases the work of the lender. The lenders now find it very easy to determine the eligible borrowers for the lending with the credit report. They no longer have to be in the doubt about the money they are investing on a borrower. They can easily provide loans towards the person who have a good credit rating and disqualify those who do not have a good credit score.
The qualification of the loans is now under a system:
Before, when there was no credit rating system, qualifying for a loan was very much depended on the personal intimacies of the borrowers with a lender. The lenders were also very suspicious about the borrowers before they decided to give out the loans. They had no other way as they personally had to bear the blame for any borrowers making any default in the repayment of the loans. This great problem was totally resolved after the credit rating system came into run. Now, the loan qualification actually comes under a system. Every money lender or banks provides a qualification of credit score to meet the loan qualification. Persons who come under this score scale get qualified for the loans and the others do not. So, if any person makes any mistake in repaying the loans after getting a loan under this system, the blame would not go towards the money lender personally.
On the other hand, as the credit rating system has a huge impact of people making mistake in their loan repayments, the people tries tier best to keep this score up. So, people who have a good credit score on the credit report has less chance to make any mistake in their loan repayment. It is not only the lenders, who are actually ripping out the benefit of the credit rating system. The borrowers also have a great deal of benefits. Through this system, anyone who meets the loan qualification is now eligible to obtain a loan. Before, people had to be dependent on the mercy of the lenders and intimacy. The credit rating system has also expanded the area of loan market. Where only high level of earning class people could access loans, now people of all classes, form medium to high can access the loan facilities.
The credit rating system has quickened the process:
The credit rating system has quickened the loan procedure. Before the online lending system, the borrowers had to process a lot of documents for the loans. At the same time the lenders had to engage themselves in various verifying procedure. In total, it used to take a lot of effort for both the lenders and the borrowers to start a loan procedure and after starting the loan procedure. Now, with the credit rating system, the lenders do not have to go for too much verification whether the borrowers have submitted the right information or not. It is because seriously there is no option of hiding within the system of credit rating.
The advantage of online lending:
The next thing that has totally changed the scenario of loan lending is the online lending system. Imagine, before if you had to seek for a loan. What you had to do after choosing your lender? You had to go towards the bank all by yourself. The procedure on those times was not a quick process as you are not the only customer in the bank. So, you need to stand in the long queue and roam from one table to another. The process never ends in one day, when it is done manually. So, you need to continue this tiring process for days. On the other hand, the situation gets more problematic if you are a person who works in an office. It is only the official persons know that how much it takes to take out time from the office., the another problem is that the official working hour of the banks is just the same as the other offices. So, people who work in the offices, always finds it problematic to go to the banks within the office time.
Now, the online loans have changed the scenario totally. With the online loans, almost all the lenders have opened an online website. The online website of the money lenders can be called as a virtual office. With the access of the online websites, you do not have to the banks yourself anymore. You can do all the works of the office from the home or from office, just if you have access to a computer and internet access. Also, there is no time limit to work on the loans now; the online websites remain open 24/7 a day. Since, the money lenders have opened a 24/7 online website to provide services to provide towards the customers. they have also provided office crews who will be working to response towards the customers 24/7. So, no matter when you are working on the websites, even if it is after midnight, you will get responses from the money lenders for your queries.
So, with the online lending system, the requirement of going towards the banks all by you is completely unnecessary. You can work from home easily. Also, with the online website system, now everything works very quickly. You do not have to waste your time consulting with the money lenders that what kind of loans you should be applying. As the entire loan schemes are provided on the website, you can see by yourself and determine which the perfect loan for you to apply is. On the other hand, as you had to rely on oral information from the lender’s end, you always had to be confused that whether you have agreed for the right kind of loan plan or not, whether you are not being cheated by the lenders or not. Now, with every information put on the website, the total procedure is very much transparent to understand that whether you have agreed for the right kind of loan plans or not.
With every information put on the website, the market research have also very easy as you can compare two or three money lenders side by side like what are the loan conditions they have provided ion their loan offers and then decide what is the best loan for you. The money lenders are also aware that the virtual loan lending system has opened this comparing option for the borrowers., that is why, they are more interested to provide loan systems where they can give the highest facilities they can provide to win the heart of the borrowers and provide loans towards them.
The virtual loan lending system has also shortened the requirement of papers you need to submit with loan applications. Since now every information are backed up online, you can provide your identity by just giving your social security number, so, you do not have to provide a lot of papers to assure your identity with the virtual loan application system. You also do not have to provide a lot of papers to make the lenders understand your financial situation & they can help you to save some money for future lending and your responses towards the financial obligations you have. You can make them understand with this information only and that is your credit score. You will also have all these information within the website, so you do not have to roam in door to door to process your papers and look for expert hands on it.
In short, the credit rating and online lending system has simply made the loan lending system so simple that it is almost like buying a product and nothing more than that.