What does credit rating mean in the context of lending?

If you want to make a loan request, you have to prepare a number of documents beforehand. The banks want information on their financial situation, regular income, and type of employment.

This requires wage slips, pension notices, for self-employed annual accounts as well as business calculations and the account statements of a few months. Of course, information about personal circumstances, marital status, and place of residence must be provided.

In addition, the loan applicant agrees to the collection of information from credit bureaus. Of course, all this information and documents are not only used to identify the borrower as a contractual partner.

They are required to assess the creditworthiness, i.e. H. to be able to assess the creditworthiness in relation to the specific loan request.

What does creditworthiness mean?

What does creditworthiness mean?

Two questions are to be answered with creditworthiness or creditworthiness. Is the borrower objectively able to repay the loan of the desired size in accordance with the contract, taking into account his income and assets, but also his personal circumstances?

In this context, one speaks of objective or economic creditworthiness. The second question is, is the borrower reliable and willing to pay so that banks can be certain that the loan will be repaid?

Willingness to pay is referred to as personal creditworthiness or subjective creditworthiness.

The willingness to pay is determined by the use of credit bureaus. Banks almost always endeavor to do this, but other credit agencies can also be considered.

Most of them are used in addition. So creditworthiness and Credit Checker are by no means the same. The content of the Credit Checker information is only one component of the credit check.

Why is the credit rating checked?

Why is the credit rating checked?

Credit bureaus like Credit Checker are happy to point out that they collect data from consumers in order to protect them from over-indebtedness. The protection concept is a reason for every credit check. But it is by no means in the foreground.

The bank’s interest in protecting itself from loan defaults is essential. Without a credit check, credit banks would be exposed to an incalculable risk of loss.

In the worst case, bankruptcies could result. But banks would always have to set the interest rate high enough to offset unforeseen losses. The consequence for solvent consumers would be disproportionately high lending rates.

Credit checks when granting credit are therefore a prerequisite for a functioning credit market that is spared unnecessary risks.

That is why the legislature has made it mandatory to check personal and economic creditworthiness before each loan.

For Germany, this obligation arises, among other things, from Section 18 KWG. This regulation is supplemented by European guidelines.

According to the laws and guidelines, commercial lenders are obliged to collect the necessary data to determine both moments of creditworthiness and to classify each borrower into a rating system taking this data into account. How the credit banks make this classification and how they weight the individual creditworthiness criteria, however, is essentially up to them. The credit banks are given a relatively large degree of discretion.

Subjective credit rating: Credit Checker

The first step that banks take when checking their creditworthiness is to regularly request information from credit reporting agencies. The most popular is of course the Credit Checker.

Credit Checker provides information on two evaluation criteria, the credit score and whether there are any negative characteristics.

Credit Checker keeps a file for almost all consumers. The file contains neutral, positive and negative characteristics based on generally accessible information and information that Credit Checker receives from its contractual partners.

Here is a summary of the most important features:

Basic data and positive data

These data in themselves have no negative impact on creditworthiness. The emphasis is on “seen in isolation”.

In a certain combination, they can have a negative impact on the willingness to lend.

  • Personal data (name, address, place of birth)
  • Current accounts (applications for opening, opening an account, overdraft facilities and other framework loans, garnishment protection account).
  • Accounts in retail and mail order.
  • Credit inquiries (conditions inquiries).
  • Credit applications, applications for real estate loans, and also revolving credit cards.
  • Borrowed and real estate loans, all types of credit cards issued.
  • Inquiries, applications and taking out loans in connection with commercial and freelance work.
  • Guarantees.
  • Leasing and hire purchase including inquiries.
  • Mobile phone contracts with term.

Of course, these characteristics are only positive as long as all obligations are fulfilled within the scope of the contract.

In addition, too many contracts in one category can have a negative impact. Example: multiple credit cards, multiple checking accounts, some of which remain unused, a large number of credit requests.

negative characteristics

Improper fulfillment of commitments leads to negative Credit Checker entries. In detail:

  • Misuse of accounts and credit cards.
  • Canceled card accounts or current accounts in processing.
  • Termination of consumer loans because the borrower is late with at least two installments.
  • Broken checks due to insufficient funds.
  • Initiated collection and dunning procedures, dunning notices.
  • Claims that cannot be realized.
  • Undisputed claims that have been reminded but have not (yet) been paid.
  • Enforcement of legally established claims, enforcement measures.
  • Applied or opened consumer bankruptcy proceedings.
  • Affidavit and warrant.
  • Applied or opened consumer bankruptcy proceedings.

A distinction is made between soft negative features and hard negative Credit Checker entries. Hard negative characteristics preclude all lending.

Credit despite private credit checker entry online without prepayment

 

Request your free and non-binding loan offer

Request your free and non-binding loan offer

Details according to banker credit: Debit interest rate of 1.93% fixed for the entire term, USD 3,000.00 net loan amount, 1.95% effective annual interest rate, 24 months term, no processing fee, monthly loan installment USD 138.21, total amount USD 3,317.04. Creditworthiness required.

Representative example: With a net loan amount of, for example, USD 5,000 and a term of 72 months, two-thirds of good credit lenders’s customers are likely to receive an effective annual interest rate of 8.45% or cheaper (fixed borrowing rate 7.91%).

Are you looking for a loan on reasonable terms, but grappling with creditworthiness problems?

Perhaps you have already received a negative letter of credit due to a negative private credit checker or weak private credit checker score?

A bad private credit checker does not have to mean the end of your credit wish. Now take the chance of a cheap loan despite private credit checker entry or poor credit rating.

The credit request is guaranteed to be free of charge and non-binding. There are no upfront costs!

Lending process

Lending process

Lending brokered by good credit lenders is carried out in five steps. A contract is only concluded with your signature and countersignature by the bank.

So you are in control of the process and it is up to you whether you really want to close the loan offer.

Step 1: Credit request:

First fill out the credit request and submit the online form. The credit request is neutral. It does not affect your score.

When completing the form, make sure that it is complete and correct. This increases the likelihood of being granted and the loan is paid out more quickly.

If you have additional income, please state this as well.

Step 2: Examination and Advice:

Your loan request will be checked manually by an employee immediately upon receipt. If there is anything unclear, you will receive a query.

On the basis of the credit check, you will receive a preliminary decision about possible lending.

If the requested loan cannot be realized in the form requested, the employee will advise you on possible alternatives.

good credit lenders now carries out a loan comparison tailored to their needs among the banks in the partner network and arranges for the lender with the cheapest offer.

3. Credit agreement and final check:

If the preliminary decision is positive, the credit contract will be sent to you on the same day. Now take the time to rethink everything and check the conditions offered carefully.

If you agree, send the signed contract documents back. good credit lenders finally checks once again that the documents are complete and that the contract has been properly completed.

Young woman on laptop applies for a loan online despite private credit checker

If the test is positive, the credit intermediary submits the contract to the lending bank.

4. Support to the bank:

In individual cases, problems can still arise after the contract documents have been submitted to the lender.

In such cases, the credit intermediary will assist you in negotiating with the bank.

5. Loan payment:

As soon as the bank has signed the loan agreement, payment of the loan is initiated.

Either the agreed amount will be transferred to the account you have specified or, if desired, paid out in cash in a branch of a partner bank.

The entire award process usually takes 5 to 7 working days. However, there may be delays in individual cases. This applies especially to applications from credit customers with serious creditworthiness problems.

Despite private credit checker credit: the special requirements

Despite private credit checker credit: the special requirements

Applicants must be of legal age, reside in Germany and have a current account with a domestic bank.

In addition, the income and financial situation must be right. The bank must be able to assume that its customer has sufficient attachable income to be able to repay the loan.

Banks use their own guidelines, which vary widely from bank to bank, to draw up a type of flat-rate budget statement. This is to determine whether a customer can afford the loan.

Credit customers must have successfully passed this “performance test” before a loan can be granted.

These are roughly outlined the general award requirements that each applicant must meet.

For the granting of a bad private credit checker loan, this means: If the creditworthiness problems are due to insufficient income, financing is excluded from the outset despite private credit checker.

Tip: If a loan is declined, ask exactly why. Was it due to a lack of income, excessive liabilities, return debits, negative entries or score values? Never let yourself be fobbed off with general designs!

In some cases, the obstacles to lending can be removed before a new application is made.

Example: The bank has identified return debits on the last three bank statements. After a waiting period of a few months, they no longer appear in the last three statements provided to the bank.

If the creditworthiness problems lie in low credit scores or if they are caused directly by negative entries in the files of credit reporting agencies, it is possible under certain conditions to obtain a normal loan despite private credit checker:

  • If sufficient income is available, the bank also accepts low scores (for example lower than credit rating level H).
  • The negative private credit checker entries are done.
  • Existing relatively insignificant negative features can be explained.
  • There are no hard negative features such as ongoing foreclosures, affidavits, arrest warrants or bankruptcy.

In certain cases, negative private credit checker entries can be cured by timely action.

Undisputed small debts of up to 1,000 USD must be removed from the file, provided that the liability has been paid no later than one month after the private credit checker entry.

Entries to the affidavit can be deleted prematurely. Confirmation from the creditor is required that there are no more outstanding liabilities.

This letter is submitted to the district court and asked to be deleted from the debtor register. At the same time you inform the private credit checker. private credit checker receives a corresponding notification from the district court.

Tip: Obtain self-assessment from private credit checker to prepare a loan application. In this way, inaccuracies in the file can be eliminated in good time. If necessary, it is possible to improve score values ​​by taking suitable measures.

Additional collateral – better credit opportunities

Additional collateral - better credit opportunities

Financing despite a private credit checker entry is made easier if the applicant has a secure, regular or particularly high income.

A civil servant or civil servant has an advantage over a young worker who has only recently taken up a permanent position.

Freelancers and traders, on the other hand, always find it difficult to obtain a loan if there are negative characteristics.

For employees with good income who have been in permanent employment with the same employer for a few years, the bank will tend to ignore small negative features in the private credit checker file.

The provision of collateral beyond a silent assignment of wages can increase willingness to lend despite private credit checker.

Transfer by way of security or pledging of motor vehicles, securities holdings or life insurance contracts are possible.

Real estate also makes lending easier, especially if the loan can be secured by a prime mortgage despite a negative private credit checker entry.

It is often recommended to sign the contract or to provide a guarantor. Many banks, especially many direct banks, expect a second co-signer for normal loans if a certain loan amount is exceeded, for example, 10,000 USD.

In individual cases, a second signature may persuade certain banks to grant loans for smaller amounts despite a negative private credit checker entry or poor creditworthiness.

From the bank’s point of view, the co-signer is the actual borrower, whose creditworthiness is solely based on.

The main signatory, who has a poor credit rating, is sometimes perceived as “ballast”, which, when viewed together, tends to burden the creditworthiness of both signatories.

The result: the bank demands higher interest rates.

The question is therefore whether the co-signer does not conclude the contract alone and whether the person charged with negative private credit checker entries does not appear to the bank at all.

Internally, the question of who will ultimately settle the loan can be contractually regulated.

Credit despite private credit checker or without private credit checker: the differences

Credit despite private credit checker or without private credit checker: the differences

Credit despite private credit checker stands for lending to people with creditworthiness problems, who therefore ask a loan from many banks for free.

These are normal installment loans. Before credit is granted, information is obtained from credit reporting agencies and evaluated. The applicant gives his consent in the application form. After granting a loan, a corresponding entry is made in the files of the credit bureaus.

Most of them will be loans with interest rates that depend on creditworthiness. People with creditworthiness problems will hardly be able to benefit from loans with standard interest rates. Because such loans require a certain minimum credit rating.

People with creditworthiness problems will never be able to benefit from the best possible interest rates. Banks are paying for the higher credit default risk.

Loans without private credit checker, on the other hand, are issued without private credit checker or any other credit reporting agency being involved. The credit check is carried out solely on the basis of income and assets.

German credit institutions are legally obliged to obtain information about their credit customers and to obtain information about the score values. For this reason, private credit checkerfree loans are only granted by foreign banks, but are brokered by German credit intermediaries.

Loans without private credit checker are often referred to as Swiss loans because in the past such loans were mainly granted by banks from Switzerland. It’s different today. Most “Swiss loans” come from bank.

The conditions for loans without private credit checker are fixed from the start. These are small loans with specific terms. Interest rates are not low. They roughly correspond to the average interest on overdrafts.