What is scoring? And what does the lender look at?
Obviously, before a loan is granted to a particular client, it must be checked to see whether it will be able to repay its obligation. This procedure is called scoring and is obvious for all loans in our market. After its implementation, there can be three specific and main situations. What are they? It is:
- Approval of the required loan
- Adjustment and subsequent approval of the loan
- Rejection of the loan
If you don’t want to risk too much trying several providers and all of your application is rejected, it’s good to know what scoring rules are going on and what is being evaluated. You’ll take something for granted, but there are things that might surprise you.
Information about your life
Did you think there was nothing to anyone? A big mistake. When scoring is performed, this particular information may also be collected. Those that relate to your personal life. In what respect? Do not be afraid of chandeliers, but a few basic things will have to be mentioned or even documented. What is it about? For example, whether you live alone or how large your household is and how many members it has. The provider may be mainly interested in the number of children, as they are related to your expenses. These too should be mentioned. Like income. Both the whole household and your partner. Accordingly, you can get a pretty good picture of the quality of your life, on which creditworthiness is clearly signed.
Jobs and everything around him
It is quite understandable that when a so-called scoring is carried out, it is necessary to deal with a specific job and everything related to it. It is clear that many different factors influence this. The income and its amount clearly dominate. Here it was true, of course, and of course there will be a clear direct proportionality. The higher the income, the better the creditworthiness and the higher the chance of loan approval. But this is not the only thing to be considered in relation to employment. Therefore, it cannot be universally said that high income necessarily implies approval. The things to be considered in connection with employment are also the following:
- Length of employment
- Type of employment contract
It can take two forms. It is either a positive financial past, as well as a negative financial past. It is clear that the negative is bad. Today there are several registers where clients who have had a loan in the past and who have problems with repayment are entered. Their crust may be registered for several years. When scoring is done, such a listing certainly does not help – quite the contrary. It is therefore ideal to strive for a positive financial past.
Why is it important? If the lender sees in the registries that you have already had several loans, and none of them has had a problem repaying, he / she will know that you are a good client who does not see the risk. However, if you don’t have a positive (and not a negative) listing, you may not know what to expect from you. Paradoxically, applying for the first loan may be a bigger problem than the next one.
When assessing the expenses associated with your household, these are usually various regular and necessary payments, such as rent and housing costs. However, when scoring is done, current financial liabilities are also considered. That is, the current credit products. What can they be?
- Classic bank or non-bank loans
- Drawn credit card
The more commitments, the greater the problem. Especially with regard to responsible lending, as there has been an effort to eliminate over-indebtedness in recent years. He who already has several loans may not go through scoring. Therefore, if you have such types of obligations, try to repay them before applying for your new loan. Mainly zero overdraft and credit card is what you should primarily achieve.
Very often the requirement for those loans where it is necessary to guarantee. Your provider may be interested in your property here. Primarily the real estate. He is interested not only in its specific value and quantity, but also in whether it is only your property, or it is a joint property of spouses, or so far only a share in a cooperative. Here too, the view of you as a client is quite clear. The more you own and the greater the value of the property, the better for you. Especially in the non-banking segment, it can often be sufficient to provide only a guarantee and a basic income to get a certain amount of money without any problems.
There are cases where it will be necessary to provide an account statement. If you apply for a loan for your banks, it can even look into it yourself. Why? Because the bank may be interested in specific cash flows. This also affects the final score and the number of points you receive. This is not so much about the total amount of expenditure, as we have already described several times above. More attention is paid to where the funds go. Again, it may seem that it is only yours, but it may not be the case when applying for a loan. What is quite risky? Regular payments to online bookmakers or online casinos are a clear example. This is a fairly clear indication that a client may be at risk. In vain you will brandish by playing just for fun.
Conversely, those cash flows that relate to your hedging in the future can be assessed positively. If you send money to savings accounts, if you send it to term deposits, it’s just a plus. Similarly, if the regular sums go for example to your building savings, supplementary pension insurance, or to various investment products, which today is quite large.