A credit history is a set of information that defines a person’s credit behavior. It is also indicated whether the person was a co-signer, a guarantor. On the basis of credit report, a credit rating is formed – the probability of issuing a loan depends on it. Checking the credit score allows you to find out your chances of getting a loan, check the absence of debts, make sure that you have not become a victim of fraudsters.
If you are in a difficult financial situation and you urgently need money, read the information concerning no credit check loans. This article will help you understand what are the best small loans without thorough credit checks. In any case, you will find an opportunity to pay tuition fees, buy medicines or a gift to a loved one, pay for car repairs or other services.
The credit history starts to form after the first loan application. When you submit the form, the bank requests your consent to check your credit history. If you do not give consent, the bank will not have the right to look at your credit history, but it also has no right to approve a loan for you.
Even if you don’t get a loan in the end, information about the submitted application will appear in your credit history.
Sometimes banks ask for your consent to check your credit history if you issue a debit card. This is so that the bank can offer you various products in the future, including loans.
When issuing a debit card, you can refuse to check the credit history. This cannot be the reason for the refusal of the debit card.
Credit scores are characterized as positive:
Different banks evaluate credit history differently. For example, some banks check information on loans for the last year, others analyze how loans were repaid 3 or even 5 years ago.
Another example: some banks are critical of even minor delays, while others are ready to issue a loan, even if a person has had several delays for several months.
A special system for evaluating a borrower is called scoring. Banks consider a good credit history with the following properties.
Older than one year. The older it is, the more information about the borrower the bank can assess. This helps to better estimate the client’s solvency. This criterion works together with the number of loans taken out.
For example, if a person took out one loan in 2015 and repaid it in 2016, the age of the credit history will not matter much: the loan was issued a long time ago, the borrower’s financial situation could change and how he will be able to repay loans in 2021 is no longer entirely clear.
No delays. It is desirable that they do not exist at all. If they were, everything will depend on how long the loan was not repaid and how long the delays were. For example, if you haven’t paid on a loan for 6 months, then made a payment and applied for a new loan a month later, most likely, the bank will not be ready to give you a loan: there is a risk that your financial situation is unstable.
Without a large number of simultaneous loan applications. If a person simultaneously applies for 5 credit cards or cash loans, the bank may think that the person has financial problems. Because of this, the scoring system may issue a denial of a credit.
The exception is if we are talking about a mortgage or an auto loan. These loans are secured by collateral, and here the bank understands for sure that a person simply compares the offers of banks, and does not plan to take out several mortgages at the same time.
How many credits were issued. The more loans the borrower has successfully repaid, the better the situation is. Separately, it will be useful if a person took out different loans: payday loans, goods in installments, credit cards, mortgages or car loans. So the bank will understand that a person can plan his financial budget for different types and amounts of loans.
Credit load. If a person has a lot of outstanding loans, he may not be able to cope with a new one. It is simply unprofitable for a bank to issue a loan to a debt-ladened borrower.
The following credit score is considered negative in the following way:
The key indicators of a bad credit history are delinquencies and a high credit burden. A particularly negative factor is if the loan was sold to collectors, the borrower was sued or he did not pay the loan at all. In such cases, the bank is likely to refuse the loan.
All other indicators are secondary. For example, the frequency of loan applications or decisions on them are important for one bank, while the other treats this information more loyally.
Individual banks may be wary of borrowers who do not yet have a credit history. Since there is no information about how a person previously repaid loans, it is unclear how he will repay the loan: repay it on time, pay it in advance or not pay it at all.
Evaluate your chances of getting a loan. If you have already taken out loans before, it is worth checking your credit history at least once a year in case of errors there.
For example, sometimes it happens that information about the loan repayment did not appear in the credit history, which is why a person may be overdue. As a result, a person is denied loans, although he has paid everything.
To understand why they refuse a loan. It happens that a person has never allowed delinquencies on loans, and new loans are denied. In case of refusal, the bank is obliged to inform the credit bureau of the reason why the loan was refused. After looking at the reason in the credit report, it will be possible to roughly understand what exactly the bank did not like: you personally or your credit history.
Most negative information is generally kept on credit reports for 7 years. Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type.
Tags: credit report, credit score, finance, loans
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