More banks create 'second look' programs for loan applicants
09/24/2010
By Credit.com Staff
Lending restrictions remain tight, making it more difficult for potential borrowers to secure personal, auto and mortgage loans from banks and financial institutions. But more lenders are establishing "second look" programs to review rejected loan applicants' credit files and income.
Many lenders conduct a second review of a consumer's rejected application if the potential borrower fell slightly short of the bank's loan eligibility requirements. This may have been the result of credit-report errors or income discrepancies, according to the Wall Street Journal. Small business loan applications are generally the most common form of financing requests that receive a second review, the Journal notes.
Second look programs are geared toward looking at consumers' overall financial file and making judgements based on their credit history, relationship to the bank and money management skills, rather than following a rigid underwriting model.
Financial professionals have long advised consumers to review their credit report for errors and know their credit score before submitting loan applications to reduce their chances of being rejected. Consumers should also abstain from applying for new lines of credit before requesting financing, which may lower their credit score.
