Instant
or Quick Credit Approval and Credit Score
Credit Scoring Enables Fast Credit
Approval
The internet is flooded with offers from companies for instant
or quick approval on credit cards and loans. Some of this
is due to the internet making everything so quick. However,
the real reason is because the credit scoring reduces the time needed in the cedit approval process. Credit scoring is changing the way lenders make laons. More lenders shorten their credit approval time by incorporating credit scoring and automated approval systems.
In the past lenders have taken several weeks to process a loan. Now the innovative credit approval system permits lenders and banks to offer credit online or over the phone. Credit scores are used not only in the approval process but also for loan pricing.
Credit scoring and automated underwriting now rule over almost all of the credit card and mortgage loan approval and pricing process. Instead of an individual underwriter carefully reviewing dozens of a borrower's financial documents to arrive at a credit decision, credit applicants are first sorted based on the credit score contained in their credit report.
Time Savings On Credit Evaluation
However, the time savings will bary depending on whether the lender adheres strictly to the credit score cutoff or whether it reevaluates appliations with scores near the cutoff.
One study found that the aproval time for consumer loan applications averaged nine days before the bank started using credit scoring, but three days after scoring had been in use for 18 months. In another study, they found a decrease from three or four weeks' processing time for a small-business loan aplication before using credit scoring to a few hours with credit scoring.
This time savings means cost savings to the bank and benefits the customer as well. Customers need to provide less documents, so applications can be shorter.
Even if a bank does not want to depend solely on credit scoring for aking its credit devisions, scoring can increase efficiency by allowing loan officers to concentrate on the less clear-cut cases.
Instant Approval -- You Need an Excellent
or at Least Good Credit Score
The instant approvals are reserved for those
with excellent and good credit. A credit card website
puts it on their front page— “Please note that
in order to receive an instant approval online, you must usually
have good to excellent credit. Certain circumstances do occasionally
arise in which more time will be needed to determine if you
are approved for the card or not.” If you were a credit
card company, would you take a blind risk on someone with
a low credit score?
In fact, it is the credit score that makes
instant approval possible in the first instance. In a matter
of seconds, a lender or credit card company can access your
credit score and see if you should be granted instant credit
approval.
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