Anyone who needs a loan but has a bad credit record score or even a negative credit record entry is usually rejected at their house bank. This annoys many consumers, some even react emotionally and skip your frustration with the bank advisor because they interpret the loan rejection as a personal devaluation. But objectively speaking, a loan rejection is not a bad thing. The applicant simply does not meet the bank’s criteria. Banks, like any other company, have to operate economically and cannot afford to take increased risks – especially at a time when banks are experiencing enormous earnings shortfalls due to continued low interest rates and increasing competition from FinTech companies.Hard, clearly defined criteria for lending are intended to help keep the credit default risk as low as possible.
The situation is not entirely hopeless for consumers with a negative credit record entry. If credit record is bad or negative, there are still ways to borrow money.
Installment loan for a slightly negative credit record
Individual banks in Germany approve borrowers even with small negative credit record installment loans. However, the applicant must meet certain criteria. A permanent employment relationship with the same employer has been a mandatory requirement for at least 6 months. Likewise, the applicant must not have exceeded the minimum age of 70 years. The amount of income and current liabilities from other loans are also meticulously checked in order to determine the creditworthiness as accurately as possible. Additional loan collateral can have a positive impact on the loan decision and conditions. An extensive credit check creates transparency and gives the bank the opportunity to make an informed credit decision based on facts.
Swiss credit for harder negative characteristics
There are also ways and means of borrowing money for borrowers with harder negative credit record entries. With the so-called Swiss loan, the bank does not request credit record information. As the name suggests, the credit institutions are located abroad, mostly in Switzerland, Liechtenstein or Austria. The increased risk due to the lack of credit record information is offset by higher loan interest rates. In addition, Swiss loans are somewhat less flexible than most installment loans in Germany. A maximum of $ 7,500 per person can be borrowed from the Swiss loan; the term is 40 months.Strict criteria for lending should prevent a high default rate.Depending on the amount of the Swiss loan and the number of children, the borrower must have a certain minimum monthly income,have a minimum period of employment with the same employer and must not be older than 62 years. This excludes customer groups such as the self-employed, freelancers, unemployed, pensioners, students, temporary employees or trainees from the outset. However, the Swiss credit has the advantage that neither credit record information is provided as part of the credit check, nor is the Swiss credit reported to credit record. Since the payment can also be made by post,
Credit from private
Peer-to-peer credit platforms do not provide credit without credit record, but also allow borrowers with lower or poor credit record scores to enter the marketplace. Lenders are not banks here, but private investors who lend their money to other private individuals. This means that it is not a bank advisor who uses hard criteria to decide whether a loan seeker with a bad credit record gets a loan, but private individuals. In return for the loan, borrowers pay interest to investors. The borrowers are each classified into credit rating classes. The worse the credit rating class, the higher the risk for investors and, accordingly, the higher the return. Borrowers who were rejected by the bank due to a poor credit record score also have chances of being financed by private investors on online credit marketplaces.
Overall, it can be said that consumers with a negative credit record entry do find it harder to get a loan in the normal way. As we can see, there are a number of alternatives to the classic house bank. Depending on the type and severity of the negative credit record entry, depending on the income situation, professional situation, other liabilities and collateral, one or the other alternative is more suitable for a borrower – this must always be determined individually as part of a credit check. If you have a negative credit record entry, the credit experts at MoneyAccess Credit will be happy to help you. Simply fill out our application form. Thanks to many years of experience, we can tell you in a very short time whether and how you can be financed.