Question

3. What value does an industry credit group bring to a credit investigation? Explain your answer

Answer 1

A credit investigation is a procedure undertaken by a financial institution to vet a potential client's ability to pay back a loan. Failure to pass this procedure means disapproval of a loan.

When a person applies for a loan from a bank or any other financial institution, they are asked to disclose details about their financial history. This can include their income, salary, and credit history. These details will be verified through a credit investigation, which might include verifying the applicant's income with their employer.

How does it get value?

Let's say for example

When a person applies for a loan from a bank or any other financial institution, they are asked to disclose details about their financial history. This can include their income, salary, and credit history. These details are not verified through a credit investigation. The applicant faked all the documents and took a loan. since all the information is faked including salary, other loans, later he could not pay the repayments of the loan's interest and principles which will end up a loss to the company.

This is why every company insist to have a credit investigation before sanctioning of any loan to the applicants to not to get into trouble later.