Imagine having money with which you can buy something you need, for example, a washing machine or a refrigerator. And, also, imagine that you can pay that money little by little. Did the idea sound good? We are talking about a Novascotiadownsyndromesociety loan. But, what happens when the bank denies you a loan? Why did it happen? Is it worth regretting?
More than once you will have realized what a credit means to many people, perhaps even to you: debt or benefits. The credit is the amount of money that they lend you with the obligation to pay it together with a cost and a certain term, it sounds good, does not it? The reality is that it is not an additional money to your income and in addition, it involves compromising part of your salary.
We all need money for different purposes, that’s why we work hard and clearly. The idea of a credit can make our hair stand on end for two things: it is money that we can use, but at the same time, it is money that we have to pay. So, if you were approved for a card, for example, learn to use it so as not to “be bullied”.
You would be surprised to know the number of people who do not understand this and who over time have gone into debt. It’s about having the whole situation under control and knowing the way you use your card, it’s as simple as making you responsible for your financial decisions.
Now, if you have arrived here, it is probably because the bank denied you a loan and it is not that the bank is bad people, imagine the amount of money that they have to lend, if they do not charge interest, opening fees or other amounts for other concepts the business would not work.
So, if you were denied a loan what you have to do, at least in the first instance, is to keep calm and think about why they told you no. Before, let’s see what are the main types of credit.
It is used for the payment of goods and services.
- Credit card
- Payroll credit
- Personal credit
- Credits ABCD (for the Acquisition of Durable Consumer Goods)
It is used to acquire, build or even remodel an entire house or apartment.
It serves, as is, to buy a new or used car.
Credit cards are the means of payment that the bank gives you so you can make purchases in establishments without having to use cash. Once the purchases have been made, your bank will send you an account statement indicating the amount of your debt, the purchases you made, the interest charged (only in your case) as well as the deadline for you to pay.
In addition, you should know that the bank will only lend you up to a certain amount, this is known as a “line of credit”. When you use your card, that credit is recovered as you pay your debt.
Why you were denied the credit
Most banks approve or reject the granting of a credit based on risk criteria. The risk is nothing other than an assessment of the ability to pay that you will or will not have to settle your debt. As we already mentioned, although the business of the banks is a bit in the payment of interest on behalf of the clients, the reality is that it is not convenient for them to sign with delinquent clients.
When a customer, or many, are delinquent banks have to resort to agencies that offer collection services and after all, this represents an expense for them that could be avoided.
Know if you are a risk
Based on different criteria, the bank can determine if granting a loan is risky for your own business. These criteria are mainly two: your credit history, and your income in order to determine your ability to pay.
The credit history
Your credit history is based on the information that institutions such as the credit bureau receive from your bank and other financial services you have contracted. Although the bureau is not in itself an adjudicator, financial institutions rely heavily on the “qualification” of your special credit report.
Bad notes in that document may be the equivalent of the rejection of your application for credit opening. The bank you went to ask for money will know that you are not a good payer and, in addition, if you are over-indebted this will be interpreted as that you could not afford one more loan.
Credit Bureau issues both your special credit report, as well as a score, a score that is obtained based on the credit behavior (how many credits you have contracted, how many are up to date and which are overdue). Score scores range from 400 to 850 points, the latter being the equivalent of a large credit situation.
Now, it is very sound that being in the bureau is bad and that many times that is why banks do not give you credit. The truth is that all those who have contracted a credit, a telephone service in postpaid or pay television, are in the bureau.
The bad thing would be to not have a history, in this way the bank would be impossible to know who is dealing with and if you are a good payer or not. Without a history, you will most likely not get credit. On the contrary, you have to prove that you are a good payer, that is, a responsible client who pays their debts on time.
If at this moment you are considering asking for a loan, but you do not know if they are going to give it or not, it is best if you have previously made sure you do not have any more debt commitments: make sure you pay your pending payments so that moment, your request is approved.
In addition, if you have no idea of your credit history or your score, the credit bureau allows you to consult it at no cost each year, and with a small recovery fee for subsequent queries.
Suppose you have an ideal credit history. You pay your bills on time and avoid paying interest or the minimums of your card. The problem is that you can not prove to the bank your income because you work independently or do not give any kind of receipt for your salary then, how do you show the bank your capacity to pay?
Most of the time, people who receive their salary in cash are those who have no way to check their income, so the main recommendation in this regard is to open an account in the same bank and deposit a monthly amount in order to demonstrate our purchasing power.
However, you can also start to formalize, if you have it, your business so that you can start issuing invoices, receipts and make tax returns. The great advantage will always be having receipts that confirm our salary payment. If you are a public sector worker, you would not have a bigger problem with this.
Remember that you have to demonstrate the ability to devote no more than 30% of your income to the payment of your loan or credit.
In addition to these two essential points, there are other factors that banks will evaluate for the granting of a loan. For example, how many times have you requested this service and how many times have you been rejected, job instability and although not all times, your age?
Age is perhaps the most important of these factors. Let’s suppose that you have an excellent income and a great ability to pay, as well as the ideal history to receive a mortgage credit, but, if you are 85 years old for setting an age, it is very likely that they will not grant you the financing or if they do it will be with some conditions.
In the case of advanced age, the bank could request the presence of a guarantee, the person who can take charge of paying off the debt if the initial contractor dies. The opposite happens when you are very young, the most likely thing is that you do not have a credit history and you will have to wait to start acquiring commitments.
For very young people, banks have developed cards for university students, so you can start a good credit history.
I tried, but they still do not support me
If more than once you have gone to the bank, but always say a resounding “no” to your request it is important that you know the reason, in fact, it is your right. Remember that the reasons for the bank can be as valid as yours, if you wish you can put a claim and have to resolve it, it is your right.
However, in addition to banks, there are other places where you can get financing. The Popular Financial Societies (Sofipos), the Cooperative Savings and Loan Societies (Socaps), and the Multiple Purpose Financial Companies (Sofom).
The latter is the most helpful and some offer a variety of impressive credit products. For example, you may have been denied a credit card, but you can go to a Sofom with which you can acquire a credit with discounts via payroll.
Before asking for a loan, always think about these three things: is it an urgent expense or can it wait? How much will it cost you? Can you pay for it? Take care of your family finances!