As the economy shifts, the risk levels indicated by credit scores shift as well. Many questions have been raised regarding the effectiveness of credit scores and their ability to accurately separate higher credit quality from poorer credit quality consumers in light of the significant economic downturn. Underlying risk profiles associated with consumers at a specific score level must be adjusted to reflect the new economic conditions.
Lenders relying on credit scores need to regularly assess whether or not the model they are using is adequately capturing the changing environment and further determine if any resulting recalibration is needed to again align risk properly with business strategies.
It is imperative to apply best-practice analyses on credit scores to assess levels of continued performance for both new accounts and existing account management amidst significantly deteriorating conditions. A critical review is undertaken on real estate loans with emphasis on the States most impacted by credit deterioration. Additionally, performance reviews are conducted for credit card and auto loan portfolios.
Underwriting rules continue to change in banking. If you need funding in the next 30 to 60 business days you should have applied four to five months ago. If you need funding in six months, apply now. This is good advice for business loans.