We all know how difficult it is to get a loan. The lengthy loan process and the number of checks the banks and other financial institutions do before granting a loan can make anyone toil hard. Loans are a risk for banking sector because if the borrower is unable to repay the loan amount the banks can be in debt this is the reason banks and other financial institutions have created a very rigorous process that help them evaluate whether the loan applicant qualifies for the loan or not and what asset he/she has to keep as collateral so that in case of non-payment of the loan amount the banks can recover by putting the borrower’s asset on auction.
But banks, financial institutions and micro lenders have fixed criteria through which they determine the eligibility of the loan applicant. Credit check in this regard is one very important factor that all financial institutions consider. Due to this most of the people who have a bad credit score are not at all entertained by the banks. But like not all people are habitual offenders similarly it cannot be said that all people who have bad credit score are willful defaulters. There can be many situation because of which a borrower might not be able to pay the premiums on time or not been able to repay the loan amount. So this is complete injustice for people like these.