January 30, 2009
It is a borrower’s pledge of specific property to a lender, to secure repayment of a loan in lending agreements. It serves as protection for a lender against a borrower’s risk of default that is any borrower if falling to pay the principal and interest under the terms of a loan obligation. Suppose that a borrower does a default on a loan due to insolvency or other event, that borrower give up the property pledged as collateral and the lender then becomes the owner of the collateral.
It is especially within banking, may traditionally refer to secured lending also known as asset based lending. More recently, complex collateralisation arrangements are used to secure trade transactions. The former often presents unilateral obligations, secured in the form of property, surety, guarantee or other as collateral. Whereas the latter often presents bilateral obligations secured by more liquid assets such as cash or securities, often known as margin.
January 27, 2009
A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus.
Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt.
Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.
January 24, 2009
It’s a negative credit rating also known as called sub-prime credit history, non-status credit history, impaired credit history, poor credit history, and bad credit history. A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purposes of loaning money or capital.
A consumer’s credit history is compiled by consumer reporting agencies or credit bureaus. The data reported to these agencies are primarily provided to them by creditors and includes detailed records of the relationship a person has with the lender.
Detailed account information, including payment history, credit limits, high and low balances, and any aggressive actions taken to recover overdue debts, are all reported regularly (usually monthly). This information is reviewed by a lender to determine whether to approve a loan and on what terms.
January 21, 2009
Fair and Accurate Credit Transactions Act
The Fair and Accurate Credit Transactions Act of 2003 (FACT Act or FACTA, Pub. L. 108- 159) is a United States federal law, passed by the United States Congress on November 22, 2003, and signed by President George W. Bush on December 4, 2003, as an amendment to the Fair Credit Reporting Act. The act allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies (Equifax, Experian and Trans Union).
In cooperation with the Federal Trade Commission, the three major credit reporting agencies set up the website, to provide free access to annual credit reports.
The act also contains provisions to help reduce identity theft, such as the ability for individuals to place alerts on their credit histories if identity theft is suspected, or if deploying overseas in the military, thereby making fraudulent applications for credit more difficult. Further, it requires secure disposal of consumer information.
January 19, 2009
What is Credit Rating Agency (CRA)?
A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings.
In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non- profit organizations, or national governments issuing debt-like securities (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer’s credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued. (In contrast to CRAs, a company that issues credit scores for individual credit-worthiness is generally called a credit bureau or consumer credit reporting agency.)
January 15, 2009
The term “credit reputation” can either be used synonymous to credit history or to credit score. Credit history or credit report is, in many countries, a record of an individual’s or company’s past borrowing and repaying, including information about late payments and bankruptcy.
When a customer fills out an application for credit from in a U.S. bank a bank, store or Credit Card Company, their information is forwarded to a credit bureau.
The credit bureau matches the name, address and other identifying information on the credit applicant with information retained by the bureau in its files. This information is used by lenders such as credit card companies to determine an individual’s credit worthiness; that is, determining an individual’s willingness to repay a debt. The willingness to repay a debt is indicated by how timely past payments have been made to other lenders. Lenders like to see consumer debt obligations paid on a monthly basis.
The higher the income, all other things being equal and the more credit the consumer can access. However, lenders make credit granting decisions based on both ability to repay a debt (income) and willingness (the credit report) as indicated in the past payment history.
January 12, 2009
A credit report is a summary of your financial history. Potential lenders will use your credit report to help them evaluate whether you are a good credit risk or a bad credit .
The three major credit-reporting agencies are Experian, Equifax, and Transunion. These agencies collect certain types of information about you, primarily your use of credit and information in the public record, and sell that information to qualified recipients.
As the rule of Fair and Accurate Credit Transaction Act (FACT Act), you are entitled to a free copy of your credit report each year from each of the credit reporting agencies.
The person has a right to see the credit report at any time if they have been turned down for a loan, an apartment, or a job because of poor credit. They may also question any information the credit reporting agency has about you and ask that errors be corrected.
If the information isn’t changed following your request, the person has the right to attach a comment or explanation, which must be sent out with future reports.