In order to own a home, many adults resort to taking loans since more often than not it is the only feasible option. This lending process is an extensive one and involves filling out an intimidating stack of paperwork which must be done. This lending process is accompanied by a necessary background check as lenders need to ensure that the borrowers are qualified and genuine applicants.
Since the appraisal of a home loan is a multi-tiered process, it can be a daunting task for first-time applicants. This is why it is important for applicants to understand the various parameters involved in a background check to avoid disapproval and non-eligibility.
Meanwhile, financial institutions should to a thorough legal and technical check to prevent frauds and consequent losses caused by non-payment of bills by phony applicants.
There is an array of mortgage loans that people can apply for, depending on their circumstances and privileges. But while the type of loan may differ, it is imperative for all applicants to submit to a background check. The degree and extent of the background check are determined by the type of loan being applied for. Someone applying for a gigantic loan will, needless to say, have to undergo a more severe and meticulous screening process as compared to someone applying for a shorter amount.
CREDIT HISTORY
“To determine how financially reliable the applicant is the loan companies will examine all of the applicant’s credit history, the amount of debt they have, the current bills, previous loans, history of paying bills on time, number of open accounts, credit score, etc. This credit history determines the amount of interest and the applicant’s eligibility for the loan.”
TOP CHECKS FOR CONDUCTING BACKGROUND VERIFICATION
IDENTITY VERIFICATION:
The probability of identity fraud is unfortunately quite high in India. About 85% of identity frauds are related to auto loans, credit cards, and mortgages. Lately, mortgage loans have witnessed a surge in identity thefts. It is therefore imperative that lenders conduct thorough and extensive background checks to prevent such dismal scenarios. Voter ID check, Aadhar card check, Passport verification, and Driving License check are amidst the verification processes that should be carried out.
EMPLOYMENT VERIFICATION:
Lenders probe and verify the applicant’s job status which should be satisfactory and the same as claimed by the lender. This information is crucial and is considered with the applicant’s credit history to determine their chances of availing a loan.
EDUCATION VERIFICATION:
It’s rather common for applicants to produce fake documents in India in order to avail loans. One of the best ways to conduct thorough checks is to utilize an extensive multi-layered database. This should include verification of the various courses, certificates, institutes, years and other pertinent information.
ADDRESS VERIFICATION:
In case of any default or irregularity, physical location is the go-to place for the financial institutions and lenders to look at. This is why physical address makes for a very significant, pivotal component of the verification process. It is important to verify that the address of the document matches the actual physical address of the applicant and the duration the resident has been living there be checked among other things.
POLICE VERIFICATION & CRIMINAL RECORDS CHECK
Public database along with lists maintained by various police departments need to be scrutinized to ensure that the applicant does not have any prior criminal history.
REFERENCE CHECK
Time must be taken out to do a valid reference check despite it being a tedious, time-consuming process. This information too is crucial to do a thorough background check.
