Why are banks denied a loan?
No bank will indicate the reasons for refusal of a loan. Only individual employees of credit institutions can lift the veil of mystery and help to figure out why banks are denied a loan, even with a good credit history. It is necessary to determine the main reasons for the refusal of lending in order to understand whether it will be possible to get a loan before contacting the bank.
The reasons for the failure of the bank loan
Lack of solvency
When calculating the solvency of a potential borrower, banks use data on the official income level of the client. It will not be possible to get a large sum to those who receive the basic salary in the form of premiums in envelopes, even in a large company. Considered sufficient is the level of income covering the mandatory monthly payments for the requested loan, taking into account accrued interest, payment of writs and alimony, and for each family member of the borrower there will still be an amount not less than the subsistence minimum.
Presence of other obligations
Solvency is affected by other loans, because the payments are taken into account by the bank when assessing income sufficiency.Remember, the lender will take into account the obligations for which you act not as a borrower or co-borrower, but as a guarantor.The presence of a credit limit on the card can also cause a refusal, even if the credit card is not used, but simply lies as an emergency cash supply in case you need to urgently improve your health or just relax abroad.
Negative reputation and bad credit history
Having received the borrower's credit file, the bank will see the violations committed, information on fraud attempts or the judge’s decision to collect debts - claims for damages, payment of alimony, and repayment of debts to individuals are taken into account. A one-time short delay made for technical reasons is unlikely to result in a refusal, but if the delay is repeated, you should not wait for approval on the application, since the bank will consider it not a sufficiently disciplined borrower.
Incorrect information in the application
If the borrower, hoping for an inadequate verification of the creditor, will indicate in the application form that the information is untrue, try to lie about the amount of his own income, keep his current obligations to another bank, or simply forget any data or simply make a mistake, the bank can immediately lose confidence and take a negative decision on the loan.Information requested in the questionnaire, the bank may be asked to confirm documentary, including asking for a certificate of income or a copy of the work book.
The bank will not approve the application for a loan if it detects the unreliability of the borrower, his family members, loan guarantors. There are other reasons for the refusal, which do not depend on the borrower:
- the lack of available funds from the bank at the moment,
- tacit refusals to grant loans to individual entrepreneurs,
- statistics on the non-return of loans to a bank by a certain category of clients-young people of draft age, students or employees of public catering establishments.
If the credit history is in order and the remaining criteria meet the requirements of the bank, but will receive a refusal, you can apply to another lender, or apply to the same bank later.
How to increase the chance to get a loan
No one will give an absolute guarantee of a positive response to an application for a loan, but it is possible to increase the chances of approving a loan. It is necessary:
- Accurately and honestly inform the potential lender all the information.
- Pre-acquainted with your own credit dossier, requesting it in the credit history bureau.
- Provide additional security for the requested loan - a pledge of liquid property, a guarantee of reliable and solvent individuals, attraction of co-borrowers, insurance.
- To fulfill obligations to creditors in a timely manner, earning a reputation as a bona fide and disciplined borrower.
You can do the opposite - go to the bank, which is not so selective in choosing customers, and get money without checking credit history, without references and guarantors, without collateral. In this case, be prepared for an increased interest rate and large commissions for servicing the loan.
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