Lenders first require potential borrowers to complete an application that includes information about their annual income, employment history, length of time at a current and/or previous address, bank accounts, and outstanding loans and credit accounts. The application will also include a line for the borrower's signature which grants the lender permission to check his or her credit report and/or score. Creditors generally obtain this information from one or more credit reporting agencies.
Once all of the above information has been obtained, a bank lending officer or lending committee will decide whether a particular applicant is considered creditworthy and will be granted credit and, if so, what interest rate will be charged. Generally, the higher a borrower's credit score, the lower the interest rate that a borrower will pay to borrow money.
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