There are times in life that we need extra cash to achieve new goals, private or business, and then we are willing to apply for a loan to the bank. Will we always receive it? If not, what are the reasons for not granting a loan? You will learn about this from the article below.
Negative credit application opinion, what does it matter?
When we go to the bank with a set of documents that are required of us to apply for a loan, we are usually hopeful and positive that we will definitely receive a positive credit decision followed by a loan. However, there are situations that after a long waiting period, we get a negative credit decision, from which the bank does not even have to explain to us.
This applies to both mortgage, cash, consolidation and all other loans. Such an official refusal to grant a loan naturally raises our anxiety because, having no idea what caused the negative decision, we do not know how and what to improve so that there will be no similar refusal at another time. However, we may pay attention to some premises and events that affect the refusal to grant a loan. Being aware of this, we are able to control or control many situations.
Lack of creditworthiness and other basic grounds for refusal
In the event of a basic premise, which is the lack of creditworthiness, which we wrote about here, the bank will always reject our application.
If we appear in any register of debtors, or in a database such as the National Debt Register, or Credit Information Bureau, it should also be expected that the decision will be rather negative. These registers contain only negative information, which is a hint for banks about the financial condition of the applicant, applying for cash at a given bank.
Another basis for refusing a loan may be our professional situation, i.e. the status of the contract that connects us with the employer. The safest, of course, are employment contracts for an indefinite period and stable contracts for a definite period, giving a good prospect for the future. Unfortunately, the civil law agreements that connect us with the company are unlikely to give a positive credit decision.
The fact that a court bailiff is heavily burdened with our property is also important if we are looking for a good loan offer.
Other reasons for not granting a loan?
We have listed the reasons why it is difficult to interfere with them. But there are other reasons that we have indirect influence on.
Let’s start with people who apply for too high a loan. High, i.e. disproportionate to the repayment possibilities of these people at the moment. It is a situation in which for the bank we will be irresponsible to the willingness to incur an obligation and we will be refused further processing of the loan application. Because the loan installment we are applying for should not exceed 50% of our income.
An equally dangerous idea is to submit several applications at the same time in different banks. This may lead to the impression that you have already tried to get a loan from another bank and it could have been rejected, which is why we are applying again, at another bank.
You have to be very careful in this regard, because it has a huge impact on our credibility. We often create a similar situation by asking at short intervals in one bank. This may lead to the bank launching a grace period, which will automatically block us from applying for a loan.
Multiple liabilities on one account
It may not sound extremely threatening, but having many credit obligations can be an inherent blockage for another bank to give us a loan, another one. And if we are also late with the repayment of individual loans, we can forget about the next open gate to funds from another bank.
We should remember to match the burden of obligations with the possibilities and realities in which we live. Because too much weight can lead to serious debts, from which it will be very difficult to get out, even saving by consolidating liabilities.
Surprising but obvious reasons for refusing a loan
There are also a few ordinary life situations that may seem surprising to us, but are obvious obstacles to getting a loan commitment, or at least hinder the process.
It is widely known that it is easier not only to go through life together, but also to pay back loans, which is naturally a fact that banks also take into account. Married people find it much easier to apply and receive a positive credit decision than it is for singles. But what is important, in a marriage, the vote of each individual also matters and both spouses must agree on the loan decision, otherwise it will be the basis for refusing further processing of the application.
Being aware of all this, it is important to try to meet all the requirements, take care of such a prosaic issue as the correct completion of the application. This is also obvious, but statistics show that a large proportion of loan applications contain errors, which is the basis for rejection.