If urgent financial help is needed, the first idea is to borrow money from the bank. However, if the bank rejects the request for the urgently needed loan, not infrequently the borrowers react with a certain lack of understanding. The reasoning is almost always the same: you have a fixed income, you are a client of the bank for years, etc … If the bank is willing to provide information about why it refuses to grant the loan, the word creditworthiness occurs in most cases – in the form of “not enough” or even “burdened”. It can be observed that borrowers are often amazed by this and react again with a certain lack of understanding. Or marriage before ignorance? So what does burdened creditworthiness mean, how does it come about and how does the bank view a burdened credit rating?
Many data on payment behavior are stored
Obviously, some consumers think that certain types of behavior in paying bills etc. do not seem to have any sustainable consequences. However, this is not the case, as any payment delays and “collecting measures” are reported centrally by the “requesting companies” to so-called information service providers and their credit rating databases – especially the SCHUFA. And what is stored at the SCHUFA to a person on credit data, plays a crucial role in the granting of loans. Because the result of all stored data is the basis of the credit rating based on which, among other things banks make a “financial” picture of the borrower. Generally known as so-called “credit check”.
Credit check: assessment of creditworthiness and worthiness
The so-called credit check for applications for a loan consists of two essential elements:
- Credibility: Financial possibilities of the client (fixed income, amount of income, financial obligations etc.)
- Creditworthiness: Payment behavior of the customer (historically)
From these points results for the banks answering the question of the so-called creditworthiness: Can the customer use the loan speak repay by monthly installments actually? In addition, the question often arises for the bank when lending, whether the customer has a necessary payment moral? If, for example, the credit rating information reveals that often debt collection procedures have become necessary in order for an invoice to be settled, this is a clear signal for banks about unacceptable payment behavior. The following transactions thus have a negative effect on the creditworthiness of a potential borrower:
- Repeated reminders
- Debt collection in the form of debt collection
- Canceled accounts
- court orders
- Declaration of an oath
- arrest warrants
If individual points for the bank are identifiable under these points in the credit report of the SCHUFA, the likelihood of awarding the desired loan drops rapidly. In that case, the desire for a loan is basically no longer feasible. Should an attempt to borrow nevertheless be made, the rejection must be taken into account.
However, this can be countered by initiating one’s own credit rating, which can be ordered free of charge once a year from the SCHUFA . Thus, it can be estimated in advance by the borrower itself in which area of opportunity the approval of the desired loan moves.