Is There a Chance to Improve Your Credit Score?
Some consumers are familiar with the situation when they are denied access to a loan for the purchase of equipment or in cash. At the same time, an employee of a bank or other crediting organization should not disclose the reason for the refusal. Therefore, without waiting for a specialist’s response, we will try to understand the reasons for the refusal and how this refusal can be avoided.
The most common reasons for denial of credit
As you know, before issuing funds the bank will inquire about the guarantees that the loan will be repaid. Such, as a rule, are information about the income of the client or collateral – a material value comparable in value to the loan amount. In addition, a number of factors may be taken into account, which form the basis for the refusal of a loan:
- Providing incomplete or false information, concealment from the bank of important information. For example, the client did not indicate in the questionnaire the presence of financial obligations to another financial institution, provided false information or false documents about incomes;
- Non-compliance of documents with current legislation. This may be, as incorrectly executed documents on the mortgaged property, and an overdue photo in the passport;
- Low documented income. Most often, people who are not formalized or receive a “gray” salary suffer from this reason — then the minimum wage will be indicated in the salary certificate;
- The borrower’s age is either too young or too old. The second option is especially common when applying for a real estate loan – there at the time of closing the client should not be more than 60 and 55 years for men and women, respectively;
- “Weak” pledge – its liquidation value will not be able to cover the loan amount and compensate the bank for losses;
- Bad credit history.
In addition, the organization may pay attention to the presence or absence of children, higher education, a salary card in the same bank, valuable property. Knowing these factors, it is much easier to prepare for applying for a loan.
How to avoid failure when applying for a loan?
You just need to prepare for each item before going to the office. You need to make sure that the documents are in order and updated. As a rule, the timing, frequency and order of updating the document is indicated. In addition, you should clarify your financial affairs, write out all the obligations. Their presence rarely serves as a cause of failure, but concealment is always. The income statement must be reliable, since this data can be clarified by the tax inspectorate and convicted of fraud or deception. Clarify the legal conditions and bank lending policies by age – this can be done without visiting the institution and not spending a lot of time.
If the loan is taken large, and on bail, then you should take care of an independent assessment of the property by certified specialists in advance. This will avoid incorrect assessment of collateral by the bank. The fact is that some banks, especially small ones, can intentionally lower the value of the collateral. This can be done both for the purpose of insuring financial risks, as well as with a direct eye to seizing collateral at a very low price and its subsequent resale at full cost. Such schemes already border on fraud and it is better to look for a financial institution with a solid reputation.
As for the last reason for refusal – a bad credit history, this is a topic for another conversation.