The economic life of the modern world is unimaginable without credit. They are taken by both entrepreneurs and private individuals, with the help of credit to make various purchases, ranging from apartments and cars to dishwashers and computers. Many people approach banks with this goal, but the question on everyone’s mind is: what is the likelihood of a positive decision? The question is not idle: as statistics show, every second applicant is rejected, and these may be people with official employment, stable high income and impeccable credit history. For what reasons the bank can refuse the credit, how to avoid it?
The personality of the borrower
From the bank’s point of view, granting a loan involves a certain risk, and the company wants to keep it to a minimum. For this reason, the client, who wants to get money, will truly “look through a microscope”, taking into account all of his characteristics without exception:
- biographical facts;
Both too old and too young can be an obstacle to obtaining a loan. In the first case, the bank fears that the borrower will pass away before the loan is repaid, or his health will deteriorate significantly, there will be a need for additional medical expenses, which will reduce the solvency of the client. For these reasons, even a person who is not very old can be rejected if he or she is seriously ill. They will not state this reason in plain language, because this would be a reason to accuse you of discrimination, but they will not give you a credit.
Note: Most banks have an age limit: the borrower must be of legal age.
If the client is too young, he is unlikely to have a permanent job, which means that he cannot count on stable loan payments. Young men may have another obstacle: the lack of a certificate of military service, because if the borrower is drafted into the army, he will not be able to pay the loan for some time. Women also have their obstacle: pregnancy or maternity leave. As in the case of the disease, this reason is not indicated, fearing accusations of discrimination, but taken into account necessarily.
One of the obligatory conditions is official employment. It is unlikely that the bank will trust a person who lives on seasonal earnings, as a stable income does not guarantee such work. There is little chance for people with low wages, as well as those whose employer is a sole trader, such employment is considered unstable.
Biography of the client bank security service will check very carefully. If there was a criminal record, even if extinguished, it greatly reduces the chances of a positive decision. If this defamatory fact is true, the bank’s security service will go into great detail, up to the corpus delicti. Even the appearance of the potential borrower can be a reason for refusal. If a person looks unkempt, he does not inspire confidence.
The reason for distrust may be even such a circumstance as the absence of an urban telephone number, home or office.
Whatever the circumstances may be, credit history is the most important factor in making a decision. A variety of circumstances may be an obstacle:
- Poor credit history;
- a complete lack of it;
- The existence of other loans.
If a person has once proven to be a bad payer in one bank, it causes mistrust towards him in other financial institutions. To be rejected, it is not necessary to have a bad reputation, sometimes it is enough to have bad debtors among relatives.
The presence of other loans reduces the solvency of the client and therefore does not contribute to a positive decision. But the opposite situation is no better, when the potential borrower has had no dealings with credit institutions at all. In this case it is unknown, what kind of payer he will be, and many banks prefer not to take risks.
Important: If you need a large sum of money, and you have never taken a loan before, take a small loan, for example, to buy a phone, which can be repaid in a short time. If you pay it off on time and in good faith, it will improve your rating in the eyes of the bank.
How to avoid rejection
The ideal borrower in terms of any bank – a perfectly healthy person 23-40 years old with a work experience of not less than a year, with a high or at least medium income, living in your own house or apartment. It is desirable that he was formally married, but was childless or had at most one child and did not expect to add to the family in the foreseeable future. What should a borrower who does not meet these criteria do?
Important: Do not hide anything, knowingly giving false information, the bank security service will still find out the truth.
There are different ways to increase the chances of a positive decision:
- Calculate in advance what part of your income will be a monthly payment. If the portion exceeds 40%, it is better to reduce the loan amount.
- Banks are more willing to consider applications for loans secured by real estate.
- If it’s a relatively small amount, it’s better to go to an organization engaged in microloans. The interest rates there are higher, but the requirements for borrowers are not as strict.
The bank has the right to refuse a client without explanation. But if several banks have already refused, and the reason is not clear, you can try to find out by contacting the Bureau of Credit History.