The previous system of acceptance or rejection of application of loan was a biased one and based on the determination of individual judgment. The borrower used to visit the bank branch, and the request for the loan and the lender would provide the loan based on the particular meeting. Thus, there was an error in judgment based on gender, caste, colour or creed. Get your Free Credit Report today.
Therefore, as against the earlier system, two statisticians, namely Bill Fair and Earl Isaac, introduced a new method for determining creditworthiness based on statistics by formulating the Fair Isaac Corporation.As time led, a few more systems came for determining the credit scores, such as the Experion. These systems were an advanced version of earlier methods and thus helped to analyse the credit standing of individuals better.
With the introduction of technology, the online credit scores were the new concepts in the town. Lenders could now easily access the credit reports with the help of technology. As per The Fair Credit Reporting Act, 2011, it was proposed that the borrowers had the right to know the reason for rejection of their loan application; thus there was the need to disclose the credit scores to borrowers.Various online marketplaces allow the credit report check without making any payment. Thus, if there are any errors in the credit report, you can report to the credit rating agency or the lending institutions.
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