Borrower screening is a basic process that anyone who intends to obtain a loan must go through. It is a necessary condition to ensure security and trust between the bank and the borrower. Conducting a borrower’s examination is also required by law and is intended to prevent fraud and extortion of credit.
What is a borrower examination? Definition of the term
Borrower examination is the process by which a bank or other lender checks information about a borrower to ensure that the person will be able to properly repay the loan taken out. Borrower screening includes checking identity, financial history, creditworthiness, ability to make commitments and other relevant information.
What does a borrower examination consist of?
A borrower examination involves checking all relevant information about the borrower to detect any possible irregularities or fraud. This examination usually includes an assessment of credit history, debt capacity, identity and other data.
For what purpose is a borrower examination performed?
The purpose of a borrower examination is to ensure security and trust between the bank and the borrower. This gives the bank confidence that the person taking out the loan will be able to repay it properly. Borrower examination is also required by law and is intended to prevent fraud and extortion of credit.
