Credit Bureau can hardly be replaced in business. Regardless of whether you open a checking account, conclude a cell phone contract or apply for a loan, the provider always makes an inquiry to Credit Bureau. Even if you have no outstanding debts and apply for a loan from your bank, for example for a larger purchase, you can still get a loan rejection despite good credit.
Incorrect entry or bad score?
But how can such a loan refusal come about despite a good Credit Bureau? In some cases, incorrect entries occur, for example in the case of identical names. However, if there is no wrong entry, the credit rejection, despite good credit, is most likely due to the so-called score, a rating number that is calculated for each loan application and is intended to provide information about the applicant’s creditworthiness.
The score is determined from numerous statistical values. This includes not only the personal financial situation, but also data such as the date of birth or the number of applications in previous years, as well as the place of residence or the number of moves in previous years. So if you live in the “wrong” part of the city and have even asked various banks for a loan, simply to compare the terms, you run the risk of further deteriorating your score. In this way, the bank may well have to assume that the customer’s credit rating is low. In this case, the probability of default is relatively high, and the loan is probably rejected.
Low ratings quickly lead to rejection
In principle, the score is not a negative institution at all. Despite good Credit Bureau, a loan rejection is usually not based solely on the score, but above all on the fact that the company that made the request relies solely on this value and does not carry out any further credit checks. However, since the grouping of customers based on the score is much easier than an own test, more and more companies rely solely on it.