|
Credit Investigation is a process used
by credit institutions to verify and attain a borrower’s
identity, personal background, and financial capability
and credit history. Credit investigation also as
security measure that protects both the creditor and
debtor from credit identity theft and other fraudulent
credit actions.
Credit investigation is a very efficient tool in
checking the borrower’s assertion of his identity. The
creditor verifies if the borrower is also the same
person who has filed the credit. Credit investigation
also verifies if it was really the borrower who filed
the loan or applied for credit. This is the usual case
nowadays because borrowers need not to come face to face
with the lenders. Most loan application forms can be
taken home and later be passed after necessary documents
have been completed. Considering that credit identity
theft is rampant in all areas of the world, credit
investigation would then play also as a way to prevent
credit identity theft from spreading. This process of
credit investigation is known as the borrower’s identity
check. |
 |
| The common process is that the
verifier calls the number listed by the borrower on the
passed application form. Then the verifier will ask the
person on phone personal details to confirm against
those written in the application form that will
determine if he really is the genuine person. Another
procedure to ascertain the genuineness of the borrower
is to assess the documents that have been passed if they
correspond with each other.
Credit investigation not only verifies the genuineness
of the borrower, but the borrower’s background as well.
Two important backgrounds of the borrower that have to
be checked are the personal background and the other the
financial background.
After the genuineness of the person has been completed,
the next process is to assess the borrower’s personal
background. This process is more like bringing a resume
or a bio data into actual use. The verifier or appraiser
will assess if the personal status and background of the
person will make him a responsible borrower and
therefore eligible to be granted a loan. Personal
background check includes but is not limited to family,
occupation, age, sibling, status and the likes. Although
at times, there is personal information of the borrower
that may be unnecessary or irrelevant with the loan
application, thus may be disregarded. So it may also be
said that personal information that would be gathered by
the lenders is the one that has ultimate relevance to
the loan application.
Moreover, after the two background checks have been
complied with, the third process continuous on. The
third process is the most important of all. The
financial background check, or credit history and credit
report check. This financial background check has the
same importance with those two earlier mentioned
background check, but this one has the greatest impact
on the lender. Financial background check comprises more
of the borrower’s financial condition. This background
check involves the use of financial statements, income
returns, income and expense worksheets, company
paychecks and all other documents that shows the
borrower’s flow of income. This is the most important of
all because this financial check verifies foremost, the
borrower’s capacity to pay.
All other background checks complement each other. There
is no implication that one is superior or one method is
most essential. All are equally important and must be
fulfilled to be efficient in providing a loan. It can be
that a person may pass the personal check but fail the
financial check, that person cannot be granted a loan.
It can also happen that a borrower has passed the
financial check, very rich but failed the personality
background check, that person cannot also be granted a
loan.
In credit investigation, all aspects should agree with
each other.
|
