The credit check
If the documents submitted are sufficient, the information will be obtained from Credit Bureau or a similar institution in order to be able to assess the risk of a credit default from the overall picture. If there are already negative entries, it will be difficult with regard to lending.
The bank can use the base score, which is calculated by Credit Bureau based on the information available, to assess your creditworthiness. All account details, contracts with service providers or trading houses are included in this data. In addition, payment problems are reported, such as qualified dunning procedures, contract or account cancellations or affidavits.
If the Credit Bureau query does not reveal any negative indications, the bank uses important criteria and key figures to assess your liquidity. For example, flat-rate amounts for living expenses per person are used to calculate the remaining liquidity regardless of the realistic effort.
Particular attention is paid to the income side : the safer the income is generated, the more positive it is for the credit check. For example, an official will always receive funding as long as he has not yet exhausted his framework and there are no negative entries in Credit Bureau. In contrast, the self-employed must provide significantly more extensive collateral.
Existing collateral is insufficient
If it is found at this point that the existing collateral is insufficient, the following options are available:
- They relinquish additional security, for example by entering a land charge.
- A guarantor agrees to assume liability in the event of default.
- The loan is declined. (You may get a loan without Credit Bureau)
Depending on the financing project, the provision of additional collateral can certainly be a tried and tested means of getting the loan paid out. However, it should be borne in mind that in the event of an emergency, the collateral can also be liquidated, i.e. the bank initiates the sale in order to meet the outstanding claims.
You should deal with a guarantor just as responsibly, because if you can no longer service the loan, it will be used to repay the installments. These decisions must therefore be carefully weighed up in advance.