Before entrusting money to a stranger, all organizations evaluate their risks, especially when it comes to large sums. That is why so many clients of banks get a refusal. What are the lenders looking for when deciding to issue a loan?
What Are the Criteria for Decision Making?
So, the criteria of solvency and reliability of the client:
- Confirmed income level – each creditor expects a refund of money and interest and wonders if there is anything to pay to the client. Banks look especially closely at this indicator and most often they refuse because of the low income documented in the application form;
- The reputation of the borrower. Every person who has applied for a loan at least once has a so-called credit history. It reflects all credit agreements in recent years and the facts of violation of credit conditions. If a person has a debt to at least one institution and does not repay it, then no bank will give him a loan;
- Availability of bail. Lenders look at this in all cases when it comes to a large amount. At the same time, the value of the pledge must fully cover the losses of the organization if the borrower does not return the debt;
- Authenticity of documents and data. Attempting to apply for a loan on forged documents or on false data in a questionnaire is considered fraud and results in entering this fact into a credit history and even initiating a criminal case in some cases. Read more https://www.osi.com.ph/philippines-financial-investigations/;
- The employee’s personal impression of the customer is typical of banks and, to a lesser extent, pawnshops. They can refuse people in a state of alcoholic or drug intoxication, or with extremely sloppy appearance, signs of violence. Also, the loan may not be given if the client is under pressure from third parties, he is clearly nervous or afraid of them.
Much more democratic are microcredit organizations. They provide credit with approval online with a minimum package of documents – a passport of a citizen of the country. At the same time, there is no need to document the income and simply indicate its amount per month in the application on the company’s website. A positive decision here depends on how good the credit history is and how gross the breaches were. If the borrower is one or two times late for a couple of days with interest paid, but has paid everything, this fact will not be the reason for the refusal to receive a loan.
Is It Possible to Be on the “black List” Through No Fault of Your Own?
It turns out that sometimes a person may not suspect that he is a malicious defaulter; this is possible in two cases. The first is when he became a victim of intruders who applied for one or several loans on him without his knowledge. To do this, they can often use lost, stolen documents or photocopies. The deceived creditor begins to search for the “villain” only after a certain period of time, when the reputation of the innocent is hopelessly spoiled.
The second case is an error of a bank employee. He may or may not transfer the loan payment there, or not mark the transaction as completed in the credit bureau. As a result of the fulfillment of all the conditions of the contract, the client still receives a negative reputation. It will take time to fix the credit history. And what if money is needed urgently?