Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
A credit file is a document file with all the essential information of the individual. It includes the name, address, contact number, and social security number. The file also has a list of former and current employers' names with all details.
In this file, you will get details of different types of debt. For example- you will have credit card details, mortgage details, and instalment loans. It even has the report to know no inquired about your credit score in the past two years. If you have any adverse credit information, then it shows the same.
In most cases, all the reliable information of the past and current accounts is in the file. It even reports whether you have made all the payments each month on time or not.
In the real estate market, the use of credit files is prominent. It is mandatory that financial institutes and real estate owners check before letting you buy the house. Loan lenders have been in this business for 30 years and have to rest assured that the borrower can pay the money back as promised. Hence, they use this credit file to check the borrower financial background.
For a home sale, the real estate agent does not have to ask for a credit file from the buyer. It is not a mandatory step. Only an essential screening through inquiry is enough. But if the real estate agent is responsible for financing the property, then the agent will ask for a credit file from the buyer.
It is more critical for a financial institution to use the credit file and check that the credit score is good enough for an individual to get the loan. Still, the potential buyer of real estate has a low credit score; then, it depends on the financial institution decision whether they will provide a loan or not. For this, they take into various other factors like employment and salary details to guarantee that the buyer can relay the interest amount monthly.
