From time to time people need to borrow money. They turn to a bank, lending company or a private lender but sometimes get a denial. Why?
Why am I denied of a loan in all banks?
As mentioned in the previous articles, banks have the lowest percentage approval of credit transactions. Available interest rates do not cover a large amount of risks, so the reasons for refusal to issue a loan in a bank can be as follows:
- Low level of confirmed income – an employee of the bank will not believe the word of the client that he has a large salary in the envelope, and will be guided only by a statement of salary from the place of work. That is why the bank can refuse even those people whose income makes it easy to repay a loan;
- Bad credit score – the borrower has outstanding or overdue loans, there are violations of the terms of the contract by the borrower;
- The absence of the necessary documents – this applies to both the personal documents of the borrower and the papers on the collateral property;
- Personal impression of a bank employee. A loan officer may recognize a client as suspicious or unreliable if he has an extremely sloppy look and is under the influence of alcohol or drugs. Also, the refusal to provide a loan can be caused by suspicion of putting pressure on the borrower – the presence of third parties with him who show a strong interest in concluding a contract.
But not only banks can refuse to lend money.
Why can lending companies refuse to lend?
The activities of these companies are very similar to the banking, but implemented only in the industry of loans and deposits. Such a narrow focus gives them a number of advantages:
- High rate of consideration of the application – a message with the decision to issue a loan will come to the phone within 10-15 minutes maximum;
- Reliability of personal data storage – transfer to third parties is possible only in accordance with the procedure established by law. For example, transferring data to a credit bureau when a contract is breached;
- The speed of transfer of funds – the loan amount will be transferred to the card within a maximum of 15 minutes;
- The possibility of processing a loan without leaving home – everything can be done online.
But even in such cases, micro finance companies may reject the application. So, why they refuse to credit in a microcredit company:
- Providing false data about yourself;
- Cases of malicious breach of credit agreements in credit history;
- Attempting to apply for a loan using the name of another person or on forged documents.
Thus, the probability of obtaining a loan is quite high, but only when the above conditions are met. But there are even more loyal borrowers – these are pawn shops and private lenders, but their activities are very different from banks and microfinance organizations, therefore they are beyond the scope of the conversation.