How to reduce the possibility of denial of credit
When in urgent need of a large sum of money, a person applies for a loan. It is profitable for banks to lend to the population, but in many cases, potential clients are rejected. The reasons for not granting a loan can be different. The bank is not obliged to give explanations about the decision, and attempts to convince the manager of one’s trustworthiness will be unsuccessful. But there are a few rules that, if followed, will reduce the risk of a loan denial.
Fill in the application carefully
The reason for refusal can be both a common typo, and an attempt to hide the real information about their income. Mistakes in the application, inattentiveness of the client, and confusion of data often arouse suspicion. To convince the bank of your trustworthiness, read and fill out the documents carefully, do not try to conceal any material facts. The security service of the financial organization will check the applications. If deception becomes evident, you will definitely be denied a loan.
Prepare additional documents
Along with passport data, attach a copy of a driver’s license to the application, account statements from other banks, and certificates of repayment of previous loans (in case the data in the credit bureau has not yet been updated). It is desirable to prepare documents with proof of income. For example, the self-employed can provide certificates from the tax office. If you rent an apartment and receive income, you can show the bank a copy of the declaration, etc.
Think about ways to increase loyalty from the bank
The presence of real estate, a car, a summer house indirectly characterizes the client as a financially literate person with a stable income. From the bank’s point of view, the risk of nonpayment of the loan is reduced, and therefore the probability of approval increases. Financial institutions are also loyal to permanent and salary clients, holders of deposits, savings and investment accounts.
Check your credit history
Information is provided for a fee, but it will allow you to assess your chances in advance. A positive credit history is a key advantage. The higher the borrower’s rating, the more likely you are to get a loan on the most favorable terms.
Sometimes it happens that credit history is ruined due to the bank’s fault. For example, a manager has untimely filed information on the debt repayment or made a mistake and the rating has dropped by several points. If there is a discrepancy in the certificate, you can write an application to the Bureau of Credit Histories with a request to make changes to your data. After that the chance of a positive decision of the bank will increase.
If you can not make changes to the credit history, prepare yourself for a long negotiation. You can apply to several banks at the same time, but borrowers who have a history of delinquency on loans are not given new loans, or offer registration at a higher interest rate.
Pay off current debts
This applies to other loans and household payments. If you already have several debts, you are likely to be turned down for a loan. Non-credit debts will also affect the decision. Arrears in utility bills, unpaid taxes on time – an indicator of the client’s unreliability.
In difficult situations always try to negotiate with the bank
It is not always necessary to resolve disputes in court. Banks often make advances to clients and prefer to get out of awkward situations without damaging their reputation. If you have already sued a bank, the risk of having your claim rejected is very high. The fact of the proceedings is recorded in your credit history. Even worse if a lawsuit is filed against you. Both options ruin your credit history almost irretrievably.
Create a positive reputation for yourself.
This is good advice for first-time borrowers. A blank credit history is just as suspicious as a ruined one. If the client has never borrowed money, he is unpredictable for the bank. It is impossible to predict his responsibility, his ability to pay.
To build a positive reputation, a credit card is well suited. You can choose a simple product with free service, make a purchase, and in a few days repay the debt without interest. The first entry will appear in your credit history. If you later apply for a loan at the same bank that issued the card, you will additionally enjoy the privileges of a regular customer.