What is a 'Credit Review'

A credit review is a periodic assessment of an individual’s credit profile. Credit reviews can be conducted by creditors, settlement companies or credit counselors.

BREAKING DOWN 'Credit Review'

Credit reviews are generally done by creditors or entities providing a borrower with credit services. Information used in a credit review is usually based on a soft inquiry which does not affect a borrower’s credit score.

Creditor Reviews

Creditors can perform regular credit reviews on a borrower’s account to ensure that they continue to meet the credit product’s standards. The reviews may also be known as account monitoring or account review inquiries. Generally if a lender does an account review, information will be obtained from a soft credit inquiry.

Creditors will also often request that a borrower provide updated personal information in conjunction with a credit review. In this case many lenders will provide a borrower with a credit increase upon completion of a credit review. Many lenders will review a borrower’s account every six to 12 months to offer a credit limit increase. In a credit limit increase review a lender will also usually require excellent payment history. Thus, most lenders will regularly reward borrowers who have excellent account payment history by increasing their credit limit over time.

Credit Counseling Services

Borrowers have a number of options for credit counseling services. These options will vary depending on the borrower’s situations and usually require a credit review to provide the best advice. Credit counseling entities such as the National Foundation for Credit Counseling are available to advise all types of borrowers on new credit products, credit consolidation and credit settlement. Settlement companies and personal credit attorneys are also available to support borrowers in negotiating debt settlements.

Many distressed borrowers may choose to work with a for profit settlement company or a credit attorney to settle their debts. Both entities will require a full credit review of a borrower’s complete credit profile in order to provide the borrower with the best service.

Settlement companies will review all of a borrower’s open accounts in a credit review to identify the potential for settlement of the debts. Settlement companies typically work with borrowers with numerous delinquencies and request that borrowers stop payments on their debt in order to increase negotiating power. Instead of paying off monthly debt, settlement companies will require that borrowers make a reduced monthly payment to an escrow account which accumulates over time for a negotiated settlement payoff.

Distressed borrowers can also work with a credit lawyer if they choose to file for bankruptcy. Bankruptcy lawyers will work on behalf of a borrower to undergo court proceedings that will eventually lead to the release of some or all of a borrower’s debt.

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