Before a loan is approved, a credit check is carried out to assess the applicant's solvency and creditworthiness.
This article will tell you how loans are approved and when a loan might be rejected.
Before you can take out a loan, it must be verified that you can afford it. Borrowers must therefore undergo a creditworthiness check in accordance with the Swiss Consumer Credit Act (CCA) before a loan can be granted. This check examines whether you are financially able to pay back the loan.
Of particular interest is not only whether you earn enough each month, but also whether you have enough money remaining after outgoings for rent, food, taxes, car, etc. to pay the installments. Based on your information, BANK-now carries out a personal monthly budget calculation. You are required to confirm the individual items with a signature, and they are then deemed to be accepted.
Review of your payment history
In order to reduce and prevent the risk of payment defaults and, in particular, over-indebtedness, we will check whether you are likely to be able to repay the loan. In addition to certain risk factors, your payment history will also be reviewed. To this end, credit banks like BANK-now obtain information from debt enforcement offices and other agencies such as the Central Office for Credit Information. Information about borrowers (for example, name, date of birth, marital status) is stored by these agencies, including information about who has already applied for a loan and who has been granted a loan.
Reasons for loan rejection
If there are doubts about whether your requested loan is appropriate for your financial situation, your application may be rejected in the context of responsible lending. In this situation, the respective lender is being responsible. And it is exactly this responsibility that we take seriously at BANK-now. In our opinion, a loan must be the right solution for our clients. This may not be the case in the following situations:
- You live below the poverty line despite having a regular income.
- You are younger than 20 years old or older than 69 years
- Your budget surplus is insufficient or negative, i.e. there is not enough money remaining at the end of the month to pay the loan installments.
- There are loss certificates for outstanding debts.
- There are ongoing or completed debt enforcement proceedings.
The criteria are weighted differently depending on the credit institution. With BANK-now, you can be sure that any "no" always comes from a sense of responsibility and is in your best interest.
If a loan is rejected, this is registered at the Central Office for Credit Information and can be seen by all associated credit banks for two years. A registered rejection does not necessarily lead to further rejections. Circumstances can change. And so can your creditworthiness and credit rating.