Normally, the bank may refuse you for one of four reasons: the bank’s policy, the borrower’s excessive debt load, credit history, and inconsistency of information when checking personal data. The easiest way to find out the reason for refusal from an employee of the bank. If the employee does not know, look for the reason in the credit history.
In the credit history of the causes of failures are displayed in the “information part”. Find the right application and see what comment the lender indicated.
Now we will understand how to decipher the formal banking reasons and what to do with them.
Under the vague definition, dozens of reasons are hidden: low income, residential address, or a damaged credit history. In order not to get lost in guesswork, request a credit or socio-demographic scoring.
Credit scoring will help those who have already taken loans or microloans. This scoring analyzes the credit history and assesses its quality in points.
If the arrow points to the green zone, you have a high chance of getting a loan on favorable terms. Yellow zone – a loan is possible on terms favorable to the bank: a pledge, guarantors, a high rate, expensive insurance. Red zone – it is better not to waste time trying to lend to the bank. Contact a microfinance organization or a credit cooperative. They have requirements for borrowers below.
Sociodemographic scoring will help borrowers with no credit history. He analyzes the socio-demographic parameters: gender, age, income, work experience, travel abroad, marital status. It is for these parameters that banks estimate borrowers who did not take loans.
The color coding is similar to credit scoring. Red is very bad, green is good. In the “Factors” block, the reasons for the score are listed.
Many problems of sociodemographic scoring are “cured” by time. A short working experience in a couple of years will become normal, got married – the scoring score went up, went abroad – another plus to creditworthiness.
The bank refuses the loan if it considers your income insufficient to repay the loan.
The bank estimates solvency as follows: monthly payments on current loans plus payments on an assumed loan are deducted from the amount of monthly income. If life is less than 30-50% (depending on the size of income), they will refuse to credit.
To get a loan in case of debt load:
Note that additional income will have to be proved. If you rent an apartment, bring a valid contract with tenants. If you are working somewhere, ask your employer for an employment contract or contract.
The bank will refuse to loan if your credit experience characterizes you as an unreliable borrower. Credit history spoil the delay, microloans, frequent loan applications and errors.
First check your credit history for errors. It happens that the lender does not enter relevant information in the credit history. For example, you have closed a loan, but in credit history it appears open, or worse – overdue. If you encounter such errors, contact the credit organization and ask to correct the error.
Another reason for refusals is late payments on loans. With active delays, no financial institution, not even an MFI, will give money. Delay in the past also spoil the credit reputation. Especially in three cases:
Delays cannot be eliminated, but they can be leveled. To start, close the active delay – those for which the penalty is charged. Then slowly restore the reputation of a reliable borrower with new loans or microloans. With a bad credit history, you can try to get a loan for household appliances or to issue a credit card. If you fail, contact the MFI for a microloan.
Do not part with microloans. One or two a year is fine. It is dangerous to take more often, because the bank will consider that you have unstable earnings and do not always have enough money to pay.
Another alarm for the bank – frequent requests for lending. All your loan applications are reflected in your credit history. If there are more than five such applications per month, the bank will take it as an acute shortage of money and, as a precautionary measure, will deny the loan.
When applying to the bank for a loan, you fill out a questionnaire. If you make a mistake in the questionnaire, and the error pops up during a banking check, the loan will be refused. You can incorrectly specify the address or phone number, skip the letter in the name, specify an invalid operator. The bank carefully checks the questionnaire, so do not try to embellish the biography or distort the data.