Few will argue that getting a loan from a dedicated service is more comfortable than asking friends or relatives for help. One can hardly imagine being a bank or a lending company clerk being judgmental or given an unasked for piece of advice about the way you should manage your finances in response to your loan request. On the other hand, our near and dear do not tend to check the credit history before lending money. One thing holds true though: neither will be willing to extend a helping hand in case your credit history is daunted with late payments. Yet how does one tackle a situation in which a certain sum of money is needed urgently to cover unexpected but pressing expenditures with a background of bad credit past?
This questions sends many a borrower on a wild goose chase looking for something called “no credit check payday loan” – a phenomenon that belongs with other utopian notions like “zero-calorie mud cake” or “no-hangover alcohol”. This does not go to say that poor credit history bereaves one of any chance to get a new loan; there are lenders willing to work with risk group borrowers, which is exactly what is meant by “cash loans with no credit check”. Confusing as it may sound, this system becomes transparent upon closer inspection.
Let us begin by reiterating that no cash advance is ever issued without a lender checking the previous crediting records. If the findings are less than stellar, it is what is called “bad credit history”, and the applicant is automatically labeled as a risk group borrower. In practice, this means that the number of lenders willing to issue a loan will dwindle (but not disappear), and those ready to take on the risks will most likely hedge their bets by tipping the scales of conditions in their favor.
This is an approximate list of what one can expect in terms of conditions when applying for a loan with bad credit history:
When applying for such a loan, there are a few very important points to consider. While every lending company is bound to perform a check of your credit history, different companies do it in a different way. If you have never heard about the expressions “hard” and “soft” credit check, you want to learn about them before you apply for an advance with a lender performing a hard credit history check. “Soft credit history check” does not leave any negative marks in applicants CV, while the “hard” one is registered as a rejection. This practice can seem unfair to borrowers, and not without a reason: the last thing one needs is another black mark compromising their credit history when applying for a loan, especially against the background of a less than perfect credit past. So make a point of steering clear of lenders practicing this approach.
When client requesting a loan, bank (or lender) first checks the creditworthiness of the customer to verify credit reliability by consulting the databases in the Credit Information Systems (CIS). These databases contain all the information concerning the client and his relationships with banks and financial institutions. The same are kept for a set period of time based on the type of information and the severity of the omitted or delayed payments. Some of the reasons for which loans are refused depend very often, though not always, on the outcome of these checks.
If the bank believes that the applicant’s income and balance sheet are not sufficient to guarantee repayment of the debt. Usually, the loan installment must not exceed one third of the monthly income.
If the work situation is precarious or there is a fixed-term contract that is almost expiring and, therefore, the conditions that demonstrate the ability to honor the debt are lacking.
If you have been reported as bad payers: for example, for delaying the payment of at least two installments of loans obtained previously. In order to access a loan it is necessary to cancel the bad payers list.
You have been previously denied a loan, and the company rejecting you performed the dreaded “hard check”, which is essentially registering the fact of application and rejection.
If there are other loans in progress the bank can refuse the loan to avoid situations of over-indebtedness of the client.
If at the time of application it appears that other personal financing requests have been made to several credit or financial institutions. This practice does not appeal to banks that may consider it a valid reason to refuse funding.
If it appears that a previously requested loan has been rejected. More specifically, this information is stored for 30 days. So, in the face of a refusal, before sending a new application, it is better to wait until this information has been deleted from the databases.
In the event that, despite being a good payer, you signed as guarantor in favor of a loan made out to a third person who previously did not pay the installments regularly.
Presenting a guarantor who turns out to be a bad payer or has been previously rejected or who, in any case, does not prove to have a financial position such as to honor the debt in case of insolvency on the part of the holder of the loan.
If you have never previously applied for loans and are therefore unknown to the databases. In this case, it may happen that the loan is refused because the information on the creditworthiness of the customer is missing and the bank is not able to verify its reliability.
By law, the bank (or the financial) that has refused the loan has the obligation to inform the client about the reasons for the denial, in particular regarding any negative data present in the databases of Credit Information Systems.
Requesting a loan is a quick solution, not at all complex, which allows us to deal calmly with a sudden and unanticipated purchase or even to fulfill a small project of life without necessarily affecting the savings of a lifetime. However, a loan is required following a very precise process that winds through specific passages and mistakes that are always good to avoid.
The insurance company specializing in loans and financing can impose specific requirements also depending on the financial solution. However, there are some rather common and universal requirements that roughly apply to the standard categories of loans, respecting the objective criteria. In this sense, the applicant must be over the age of 18 and below the age of 75 (although in some cases this limit is raised even over75), they must have a demonstrable income, then have a job and must be able to prove that you have a paycheck. Moreover, in order to apply for a loan, it always helps to have a good history and, finally, you need to have a current account and be resident in the US.
But what are the factors that a bank or a company evaluates before granting us the loan? Surely the criteria that we have already listed, then the age, the demonstrable income, the paycheck and our banking history and therefore the verification of creditworthiness. The type of profession is still important, because depending on our work, a company or a bank can ask us for a certain type of documentation or not to prove that we can repay our loan over time. For example, conditions change depending on whether you are self-employed or employed, hired for a fixed or an indefinite period, or if you are retired. As we said, also the so-called creditworthiness is important, especially in the first phase of the loan investigation.
Let’s now look at the 5 mistakes to avoid when asking for a loan, so as to increase the chances of obtaining it.
A bad move because the banks, even if different, are all connected to a single database. This means that asking for personal funding from several institutions at the same time will not increase our chances at all, but, on the contrary, will expose us to the risk that our request will be refused. The reason is very simple: for banks asking for a loan to different realities at the same time is an indication of a desperate economic situation and therefore your reliability would not be at all satisfactory for them.
In the unfortunate event that the loan is not granted, never try again. You do not have to submit a new request, even in an institution different from the previous one, without spending at least one month or 40 days, the time when our request remains visible in the centralized banking system. So let’s say a little, otherwise you risk being discovered and then failing again.
If your request has been refused, expressly ask the bank for the release, an important document that states that our request for funding is no longer open, but has been rejected or even canceled. In fact, if the status of the practice remains open on the request, you will not be able to try again.
The guarantor, if required, is to be chosen with extreme care. In fact, if we are not able to provide the bank with the guarantees necessary to repay the loan, we will be asked to provide a guarantor, the one who, in front of the bank, undertakes to honor the debt if we do not we did it. So pay attention to this choice, because the kinship is not enough, you need someone who has an income and a high bank reliability.
The last mistake to avoid is generic but essential. Let’s never show impatient, restless or impatient with whoever is managing our bank practice. Try, even if you are in a moment of difficulty, to manage the whole process with the calm and mental clarity needed to convince those in front that this loan we deserve it all.