Credit History

Credit History

Credit history is a record of a borrower's past borrowing and repayment behavior. It is used by lenders to assess the creditworthiness of a borrower and to determine whether to lend money to them.

In the context of securitisation, credit history is important because it is used to assess the risk of the underlying assets. The better the credit history of the borrowers, the lower the risk of the underlying assets and the securitisation.

There are a number of different factors that can be included in a credit history, including:

• Payment history: This includes information about whether the borrower has made their payments on time and in full.
• Debt-to-income ratio: This is a measure of how much debt a borrower has compared to their income.
• Public records: This includes information about any bankruptcies or other legal judgments against the borrower.

Credit history is typically obtained from credit bureaus, which are companies that collect and store credit information. Lenders can access credit reports from credit bureaus to assess the creditworthiness of borrowers.

Here are some examples of credit history in securitisation:

• A securitisation of mortgages might include credit history information for the borrowers. This information would be used to assess the risk of the mortgages and the securitisation.
• A securitisation of credit cards might include credit history information for the borrowers. This information would be used to assess the risk of the credit cards and the securitisation.