The relationship between credit history and loan approval processes has become an increasingly common topic in IELTS Writing Task 2 examinations. Based on analysis of past IELTS questions, this theme has appeared multiple times in different forms, particularly in questions about financial responsibility and banking systems. Let’s examine one of the most representative questions and analyze sample responses across different band scores.
Question Analysis
Some people believe that banks should only approve loans for individuals with good credit history. Others argue that banks should also consider other factors when making loan decisions. Discuss both views and give your opinion.
This question requires candidates to explore different perspectives on loan approval criteria while presenting their own viewpoint. Understanding credit scores and loan approvals is crucial for developing a well-reasoned response.
Banking professionals reviewing loan applications and credit reports
Sample Essay 1 (Band 8.5)
Financial institutions’ loan approval criteria have become a subject of heated debate. While some advocate for strict adherence to credit history requirements, others suggest a more comprehensive evaluation approach. In my opinion, while credit history should remain a crucial factor, banks should adopt a holistic assessment strategy.
Those who support credit history-based approvals argue that past financial behavior is the most reliable predictor of future reliability. Understanding the importance of protecting credit history helps maintain financial stability. For instance, individuals who consistently make timely payments demonstrate financial responsibility and risk awareness. Moreover, this approach helps maintain the stability of the banking system by minimizing default risks.
However, exclusively relying on credit history may overlook valuable borrowers who lack credit records. Many young professionals or entrepreneurs might have substantial income potential despite limited credit history. The importance of credit monitoring for loan approvals should be balanced with other considerations such as current income, employment stability, and business prospects.
In my view, banks should implement a balanced evaluation system. While credit history provides valuable insights into financial responsibility, other factors like income stability, asset ownership, and future earning potential should also influence lending decisions. This comprehensive approach would create a more equitable financial system while maintaining reasonable risk management standards.
Sample Essay 2 (Band 6.5)
Nowadays, many people discuss about whether banks should only give loans to people with good credit history. I will discuss both sides and give my opinion.
Some people think good credit history is very important. When people always pay bills on time, it shows they are responsible. Banks can trust these people more easily. Also, how credit ratings affect loan approvals is important for reducing bank risks.
On other hand, some people think banks should look at other things too. Many people have good jobs but no credit history. For example, fresh graduates with good jobs cannot get loans easily. Also, some business owners make good money but have not borrowed before.
I think banks should check both credit history and other factors. While credit history is important, they should also look at salary, job stability and future possibilities. This way is more fair for everyone.
Vocabulary Analysis
- comprehensive (adj.) /kɒmprɪˈhensɪv/ – complete and including everything that is necessary
- holistic (adj.) /həʊˈlɪstɪk/ – considering the whole thing or being rather than parts
- predictor (n.) /prɪˈdɪktə(r)/ – something that indicates what will happen in the future
- equitable (adj.) /ˈekwɪtəbl/ – fair and impartial
- adherence (n.) /ədˈhɪərəns/ – the act of following a rule or requirement
Bank employee analyzing credit score metrics on computer
Conclusion
The topic of credit history and loan approval processes remains relevant in IELTS Writing Task 2. Similar questions might focus on financial inclusion, banking regulations, or economic equality. Practice writing responses to these variations:
- Should banks provide special loan programs for young professionals without credit history?
- Do strict credit requirements contribute to social inequality?
- How can banking systems balance risk management with financial inclusion?
Share your practice essays in the comments section for feedback and improvement suggestions.
