Credit without creditworthiness and Credit Record: possible or fraud?

If you open this page, you have probably looked for a loan with no credit rating. You will not find such a loan anywhere. No bank around the world can help customers with loans if it is already certain from the outset that the applicant will not be able to repay the desired loan due to lack of creditworthiness. If you find offers of this type, assume that they are fake packs. Either a fraudster wants to take money from you without paying anything worth mentioning.

Every credit is preceded by a credit check

Or it is a fictitious offer to catch customers to bring other financial products to the man or woman. But you probably didn’t understand the term “without creditworthiness” so narrowly in the technical sense. Rather, you want to inquire about lending options if there are credit issues. If this is the case, some financial service providers may be able to help you – albeit in a very limited framework and not with the best credit terms.

You can find out what options are available in this article. However, a warning beforehand. If several banks reject credit requests, the reason can be serious over-indebtedness. In such cases, the use of professional debt counseling is the right solution and not the attempt to borrow again.

Two-part credit check

Credit institutions check the creditworthiness of their customers in two ways. They investigate how reliable the customer will be when it comes to repaying the debt (subjective credit check). In addition, it is determined whether his personal and economic circumstances are arranged in such a way that he is actually able to repay the loan (objective or economic creditworthiness). The reliability is primarily determined by obtaining business information.

By signing the loan application, the borrower agrees. Credit Record information is customary for consumer loans. Some banks contact in addition or only other credit agencies. The credit agency informs the bank about the contents of the file. The bank learns whether there are negative entries. In addition, the credit score determined by the credit agency is communicated. If the credit score is too low according to the bank’s lending guidelines, there will be no lending.

The bank itself determines the economic performance

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For this purpose, it uses the information from the loan application and the content of the requested documents. The starting point is all of the applicant’s net income. Preliminary obligations are then taken into account. Finally, the bank estimates the running costs using a budget calculation that is carried out according to the guidelines of the bank. The customer receives the desired loan if, in accordance with the bank’s lending guidelines, proper repayment is very likely. In any case, sufficient free funds must be available, which can also be subject to attachment.

Lending despite poor economic performance?

If the economic creditworthiness check is negative, a loan is always excluded. If the regular income is insufficient to service the loan, it does not exist. Loans without income, without work and for people who receive social benefits are therefore excluded. This includes unemployment assistance and Hartz – IV. Students, schoolchildren and, as a rule, self-employed trainees also receive no loans. This is especially true for small loans without Credit Record, the so-called Swiss loans. Many don’t know that.

But without a regular minimum income, there are no such loans. The attachable part of the income must be able to cover the monthly installments. Most credit providers make it very clear that people without regular income do not have to apply for a loan in the first place. This also applies to people in a trial employment relationship. If an employment relationship is limited, the term of the loan may not exceed the time limit. Other credit providers, the well-known German loan broker Fine Bank is an example, give clients with insufficient or even no income the opportunity to apply for a loan.

But this happens more for optical reasons

Because this group of customers has to provide a guarantor or have another person sign the loan application. So in reality, the guarantor or co-signer is the borrower. These people must fully meet all creditworthiness requirements. The guarantor or co-signer is fully liable for the proper fulfillment of the liabilities from the loan.

Anyone who vouches for people with no or low income or who also signs a loan agreement must know that this will result in an entry in the files of the credit bureaus, especially Credit Record. Such an entry does not have to be harmful in every case. However, it can quickly become a negative Credit Record entry if there are problems with the repayment of the loan. In addition, the entry of a guarantee or co-signature can have a negative impact on the creditworthiness of your own loan.

Problems with subjective creditworthiness (negative Credit Record, low score)

Haras well as a lack of economic performance. Incidentally, this can also apply to loans without Credit Record. The lenders from Liechtenstein or Switzerland do not collect any information from credit bureaus in Germany. However, you may contact the official register of debtors. Hard Credit Record entries are affidavit, warrants, bankruptcy and entries due to legally established unpaid claims.

If there are problems with so-called soft Credit Record entries, borrowing is not easy, but some providers may overlook such Credit Recorddelle. Examples of soft entries are completed but not yet deleted entries or entries due to minor “offenses”, such as the accidental failure to pay a telephone bill. Open Credit Record entries should always be cleaned up before questions regarding credit. If there are soft negative Credit Record entries, credit inquiries made to direct banks via an online loan comparison may be promising. This is especially true if the borrower has a good, secure income, as is the case with civil servants or civil servants, for example.

Credit collateral in addition to a silent assignment of salary increases the willingness of banks to lend

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Assignments or assignments as security and, of course, sureties or a second contractual partner are considered. Motor vehicle loans, for example, are often granted against transfer of ownership of the motor vehicle if there are smaller Credit Record entries or the credit score is below average. Finally, there are cases in which the content of the Credit Record information is not important or in which Credit Record information is unnecessary. These are loans that can be 100 percent secured with securities or with products of the same type.

This applies to securities accounts that can be pledged. The amount of a security portfolio can serve as security depends on the risk level and is likely to be assessed differently by the banks. Bonds from issuers with an excellent rating may be able to be used at 70 percent of their value. First class stocks can be slow at 50 percent to 60 percent. Particularly volatile papers, perhaps only with 30 percent or even only with a lower percentage.

Life insurance policies can also serve as collateral for a loan. Borrowers have two options

  • You can take out a policy loan from your insurance company or from a buyer in the secondary market. From an economic point of view, this is a kind of advance on the performance.
  • Banks also accept life insurance as collateral for a loan. The starting point is the surrender value at the time of borrowing. A loan amount is granted that is below the surrender value, for example 70 percent of the surrender value.

Tip: Credit Record self-assessment is highly recommended before each borrowing, especially if it is a matter of larger amounts. Make sure that your Credit Record file contains correct and complete information in every respect.

This also applies to personal data, such as address data

Positive features, such as the proper processing of a previous loan, should not be missing. Unjustified negative features must be deleted. The same applies to entries that still exist despite the expiry of the deletion period.