Loan denial is not always associated with low income or bad credit. Let's consider 8 reasons why a borrower's credit rating may be downgraded.
When deciding whether to issue a loan or not, banks rely on an analysis of the client's solvency. The total income and the level of debt burden are considered, i.e. what are the monthly mandatory payments. Good credit is also important. But there are also minor factors that can influence the decision of a credit institution.
1. Simultaneous application to several banks
If you need a loan, experts advise you to contact one organization first. If a refusal is received, then the next one. The simultaneous filing of applications with several organizations is viewed by the security service as suspicious. Most often, this is done by people who really need money, but everywhere they are refused, and so there is a chance that at least someone will lend.
This information is provided by the credit bureau. They have data not only on applications to banks, but also to MFOs, and refusals have also been recorded. In this case, it is better to wait 2-3 months and re-apply.
2. Surety
A person may be refused if he is a guarantor for someone else's loan. And although the borrower makes regular monthly payments and has an excellent credit history, there is still a risk of default. Then the obligation to pay the loan will fall on the guarantor. Here, the ratio of the amount of income, the balance of the loan under the guarantee agreement and the amount of the requested loan is of great importance.
It will not be possible to unilaterally withdraw from the surety agreement. It is necessary to carry out the procedure for replacing the guarantor, having obtained the prior consent of the borrower and the lender.
3. Availability of credit cards
Even if the cards are simply kept just in case and are not used, the very fact of its presence is already an obstacle to obtaining a loan. The bank believes that the client can use the card at any time, and then the total payments will be unaffordable.
As a general rule, banks put up to 10% of the limit of an existing card in the calculated debt load. Thus, a card with a limit of 50,000 rubles is already an automatic increase in monthly payments up to 5,000 rubles, even if it is not used. Therefore, when applying for a large loan, it is recommended to close such accounts.
4. Good credit history
It would seem that you are a reliable borrower, you can safely issue a loan. But there is a nuance - early repayment. When applying for a loan, the bank incurs certain expenses, which it covers with interest, but also wants to earn money. In case of early repayment, the organization loses this very income, by the way, hence the moratorium for the first months.
It is simply unprofitable to issue a loan to a financially literate person. This is the trap that a conscientious borrower can fall into.
5. Unclosed contract
It is very important to close the loan agreement itself after transferring the last payment, which is not done by everyone and not always. There are times when the payment is credited with a delay. As a result, a fine or a penalty is charged for delay. The amount is small, rarely even exceeding 100 rubles, but it is listed as a debt.
The bank does not want to waste time on notification and collection, but submits information to the credit bureau. So an honest borrower easily turns into a hard-core defaulter. Therefore, before applying for a loan, it is important to make sure that there are no overdue debts left.
6. Bureau errors and the machinations of fraudsters
The credit history may contain information about loans, which did not exist at all. These can be loans issued by fraudsters. In this case, you must immediately contact the law enforcement agencies and do not wait for calls from the collectors. Then apply to a credit organization with a statement and prove through the court that the person did not take a loan. It is especially difficult with MFIs that issue loans remotely via the Internet.
Or it is a mistake of the credit bureau. For example, duplication of information on an existing loan, which automatically doubles the debt burden. In this case, you will have to submit a written claim to the bank for correction.
7. Not credit debts
In addition to loans, there may be other debts, for example, taxes, fines, utility bills and alimony. Their presence will negatively affect the decision-making of the credit institution. If the client allows delays on them, then it is likely that there will be difficulties with the return of the loan.
Therefore, it is recommended to make sure that there are no arrears on existing obligations. Information can be found on the portal of the State Service or the website of the Bailiff Service.
8. Credit histories of relatives
This is true with zero credit history. It is difficult for a bank to assess the client's solvency, and he can check it with his close relatives. This allows you to predict the likelihood of a loan default, but does not provide 100% certainty. Solvency is still an individual quality.
In any case, in order to be safe, you need to check your own credit history in advance. It can be requested twice a year absolutely free of charge (electronic and paper). You can find out in which organization it is stored, and you can make a request through the State Service website.
