3 Ways in Which Lenders Assess Borrowers’ Creditworthiness
One of the biggest challenges faced by lenders is that of assessing potential borrowers’ creditworthiness. Lenders need to be reassured that the potential borrowers are creditworthy, before lending them money. The main question that the lenders usually ask themselves in this regard is as to whether the borrowers are likely to repay the money, once it is lent to them. And in order to get an answer to this question, they usually look at 3 things. In other words, there are 3 main ways in which lenders go about assessing borrower’s creditworthiness, namely: By looking at the borrowers’ earnings: upon looking at a person’s earnings, it is possible to tell how much money they can afford to borrow (or, in this case, how much they can be viably lent). Thus,…