Credit Report Articles

Cautious lenders mean borrowers need high credit scores

Loan applicants may find funds harder to come by in light of ongoing bank difficulties.

Financial institutions have only recently begun to step up their lending activities and remain generally reluctant to issue loans to people who lack particularly high credit scores.

While the credit crunch that characterized much of the recession has largely waned, banks may still be reluctant to issue loans in light of the difficult financial positions that many currently find themselves stuck in.

In fact, the Federal Deposit Insurance Corporation recently announced that insured banks recorded an aggregate profit of $914 million in the fourth quarter of 2009, which was a year-over-year improvement from the fourth quarter of 2008 but was still seen as falling lower than the industry's historic average.

A total of 702 banks were said to be on the FDIC's problem list, which means they could face the danger of failing in time. Still, FDIC Chair Sheila Bahr called on lenders to take a "balanced approach" in regard to granting loans and issuing credit.

Despite some improvement in the economy in recent months, banks are going to remain cautious in the short term about who they grant loans to. With that in mind, keeping a close eye on one's credit report and avoiding any late payments are wise strategies to follow.