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Credit conditions have been improving substantially in the last few months, as consumers continue to make on-time payments into their various outstanding debts and once again show an interest in borrowing.

However, at the same time, many lenders are still being cautious in rolling out the type of loans that were relatively easy to obtain prior to the recent economic downturn, according to a report from Central Wisconsin Business.

In many cases, not only do qualifications to receive substantial loans such as mortgages or car loans remain elevated since the end of the recession, but the processes for approval often stretch beyond merely checking a credit report and taking a quick look at some of their other financials, as they did in the past.

“Six or seven years ago, we’d look at the last two years’ tax returns to figure out income, and that was it,” John Proulx, senior vice president at Peoples State Bank in Weston, Wisc., told the newspaper. “Now, we have to get transcripts from the IRS to verify those returns.”

As a consequence of these still-high standards, many consumers who saw their credit standing suffer somewhat during the recession may continue to have trouble obtaining a sizable loan for some time, the report said. And often, even when they are able to go through the approval process, it takes far more time, effort and paperwork to complete. Typically, consumers will need credit scores of 720 or more to be able to get the best interest rate available, and in many cases, the higher the applicant’s rating, the smoother the process will be.

The reason for this is that lenders obviously do not want to run into more defaults again as the economy continues to improve, the report said. By going to greater lengths to verify applicants’ financial wherewithal, they are putting themselves in a better position to be insulated against potentially risky borrowers.

One type of lender has broadened qualifications in recent months, however. Credit card issuers are once again sending out a large number of offers to subprime borrowers who have experienced trouble paying their bills in the past, but are simultaneously trying to offset that risk by courting a larger number of consumers with top-notch credit ratings as well.

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