Currently, an increasing number of people resort to the services of banks, making loans for various needs. However, not all clients conscientiously fulfill their obligations to the bank for various reasons: problems at work, in business, with health or simply irresponsible attitude to the obligations assumed. There are those who fraudulently seize bank funds.
Naturally, as a commercial organization, a bank cannot afford such losses, and before issuing a loan it conducts a thorough check of the solvency and reliability of its future borrower. As a generalized concept of all criteria, a special indicator was introduced, which will be described below.
It should be noted that all banks transmit data about their clients in a credit bureaus (credit history bureau), which is stored there for a long period of time, and upon subsequent appeals to a bank or even an Payday Loan, all this information can be obtained and then processed future lender. With the ensuing consequences.
The definition of “scoring score” implies a degree of confidence of the bank or Payday Loan to the person who wants to get a loan. Expressed in numbers.
When a client comes to the bank for a loan, before the loan officer decides whether to issue a loan or refuse, the potential borrower provides information about himself, which in most cases needs to be documented.
Let’s look at the process of determining this indicator on a specific example.
Unified system of calculation of this indicator does not exist. Each bank or some other financial organization determines for itself the list of criteria and the digital equivalent of one or another value. However, the following criteria are most often used:
1. Personal data specifically:
- age – relatively young people, aged from 18 to 35 years old, is appointed from seven points, middle-aged people (from 35 to 45 years old) are charged from twenty-nine points, to all who are older than this age – 35 points. Most likely, banks think that with age people become more responsible for their actions.
- marital status – to potential borrowers who are currently officially married, the bank can award from 29 points to “proud loners” – on the contrary, not more than seven points. Most likely, it takes into account the possibility of one of the spouses to undertake a loan obligation in the event that the borrower has any problems (he becomes ill, is dismissed from work, etc.).
2. The degree of prosperity of the client. Mainly considered here:
- where it works (form of ownership of the enterprise) and what position it occupies;
- for how long the person has not changed the place of work, how much work at all;
- the magnitude and dynamics of income;
- whether there are financial obligations to other structures and how adequate they are to the declared income;
- are there any additional ways to make money (official or not so).
It is important to take into account the fact that credit history is taken into account. Almost all lenders pay attention to it. If a customer has overdue debts at another bank (especially for current monthly payments), the chances of getting a loan in most cases are reduced to zero.
3. All other information. This section may take into account a variety of factors. Most often taken into account:
- the presence of movable and immovable property in the property (at the moment);
- availability of a guarantee for another loan or pledge;
- how often you are abroad and in which countries.
At first glance, all these criteria look somewhat ridiculous, but to a certain extent they allow a bank employee to assess the solvency of a future borrower.
Adding all the points accrued for each of the above criteria, the total “confidence index” of the future borrower is displayed.
It should be noted that all systems designed to calculate this criterion perform a rather primitive “mechanical” assessment of all these criteria, evaluating them exclusively on the documents provided by the client. A vivid confirmation of this is that the borrower can significantly lower the score for the fact that he does not have a permanent residence permit in the region where he wants to take a loan or where he works (it is believed that this is a minus to his income and social status). Conversely, to accrue a lot of additional points for the specified and confirmed management position (not taking into account the fact that this company is only open yesterday).Score level for decision making by the bank
There is a possibility that the same bank refused to issue a consumer loan to the same client, but approved the mortgage. Paradoxically, but true. The thing is that, of course, the bank is interested in issuing small loans, but not in such a way that it is ready to take very strong risks. After all, in order to return the debt (even if it is insignificant), the bank is forced to spend significant enough resources. But in the issuance of a large loan (the same mortgage or car loan), the bank is very interested. It is also important that large loans, as a rule, are issued on the security of any movable or immovable property – this is an essential guarantee for the bank. Often signed an additional contract of guarantee.
It should be borne in mind that the probability of issuing a loan increases the provision of all the necessary supporting documentation (certificate of income, marriage certificate). In addition, in some cases the personal factor matters – if the borrower has been a bank customer for a long period of time and has proved himself responsible and honest, the bank employees know and trust him, then the probability of receiving a loan is several times higher.
However, even if you have not given a loan, you should not be upset. It can be issued in another bank or on more severe conditions (material compensation to the bank for additional risk). In another case, if the client has a high “confidence index” of the bank, they can offer him a loan on more favorable terms.
The scoring score is a relative definition, and therefore does not guarantee a positive or negative response from the bank. At the same time, borrowers should remember that all the facts of their irresponsible attitude to their duties (overdue monthly payments, evasion from communicating with bank employees in case of overdue debts) are entered into special tables, and even if they are addressed to another bank, the probability of failure above. So credit history should be cherished, and in the event of any force majeure, it is better to ask for money from friends, neighbors, acquaintances or relatives to borrow money and still make a monthly payment, saving money (the bank will not charge a fine) and reputation of a bona fide customer.
Having paid one loan, most of the clients say to themselves that they will never take a new one for anything, but life makes its own adjustments.