Question

In: Finance

The 4 reasons why CTOS and CCRIS are important to banking institutions for credit risk assessment.

The 4 reasons why CTOS and CCRIS are important to banking institutions for credit risk assessment.

Solutions

Expert Solution

When you apply for a loan or a credit card, banks need to check your previous debt paying report.

For determining this, they referto certain credit report to indicate that you are in a good financial standing in terms of debts.

Simply, if you can pay your debts before, you're likely to be able to continue doing so.

Your credit reports (CCRISand/or CTOS) alongside your income statements will be your bank' s reference to decide whether to approve or reject your loan.

Banks and other financial institutions are also running a business so any case of default is big loss for them. So they rely on CTOS and CCRIS report for prevention.

- CTOS and CCRIS show credit payment ability and all financial commitment of individual/ Company.

- CTOS and CCRIS pay closer attention to credit report so you don't sabotage your future applications with financial institution.

- CCRIS provide information about your outstanding home loan, personal loan, credit cards, overdraft etc. Apart of this it gives all the information regarding your outstanding installments, payment misses, details of legal cases against you etc.

Whether you have taken a joint loan or a loan in partnership with someone.

Whether you have any special attention account or any account which is under bthe close supervision of financial authorities.These all information can be taken from CCRIS.

On the another side CTOS maintain a record of historical information about person' s credit experience to assess the credit worthiness and repayment capabilities of individual or business companies.

CTOS verifies company's registration number, holding in incorporated companies, any legal actions against individual/Company, any case filed of bankruptcy.

Both reports provide factual data. They don't from any opinions on financial health or credit worthiness, which is upto lender to decide. Nor they do any black listing. So more transparency in the work.

These reports indicate that you are not in a debt and are in a good financial standing, the banks are more likely to offer a higher LTV/ margin of finance to you.


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