Applicants must access credit scores before applying for a loan

Application for availing a credit facility may involve roles of various stakeholders like principal applicant, co-applicant, guarantor, etc. The lenders may check the credit histories and scores of these stakeholders before deciding on the loan application. If you are a stakeholder on a credit facility, it is imperative for you to understand the scope of your responsibility towards this loan and also its implications on your credit score. lSingle applicant/borrower: Only the applicant is solely responsible for making payments on the credit account. Therefore, only the applicant's credit score will be checked by the lender before deciding on the credit application. lCo-applicant/borrower: A co-applicant refers to a person, who applies along with the primary applicant, for a loan. This is done so that the income of the co-applicant can be used to supplement the borrower's income and increase his/her eligibility or credit limit. As a co-applicant, you are completely responsible for the loan if your partner defaults. A co-applicant's credit score is checked by lenders before deciding on the loan application. If a co-applicant's credit score is low, it may negatively impact the loan application. On the other hand, the co-applicants credit score also gets negatively impacted if the partner defaults on the payments of the loan EMIs. lGuarantor: A guarantor pledges to repay a loan on behalf of a third party that has applied for or availed the loan facility. He provides a guarantee to the lender, that he will honour the obligation, in case the principal applicant is unable to do so. A guarantor's credit score may be checked by lenders depending on their credit sanctioning policies. It is always a prudent practice to have a guarantor who has a higher credit score to guarantee your loan facility. Also, if a borrower defaults, it will negatively impact the guarantor's credit score as well. Information on the default of these payments will also appear in the "accounts" section of the guarantor's credit information report (CIR). lAuthorised user: This is used for add-on credit cards. It implies that the authorised user has an access to credit, but is not responsible for paying dues on that particular account. The authorised user's credit score is not checked before deciding on the credit card application. Also, as the responsibility of the repayment of dues rests solely on the credit card owner, only the owner's credit score will get impacted. It is a best practice for all stakeholders to access their credit scores and reports before applying for a loan. Regular review of credit history and score will give a precise idea of the health of the credit accounts that they have a stake in.