Have you been denied a consumer loan application? This can be due to many conditions, and some are easier to solve than others. We deal with the most common situations and show you what you can do to get the loan granted.
Consumer loans are tightened
The Norwegian economy has been strong for a long time, and borrowing in the country has increased at the same pace. Consumer loans and credits are where debt growth is growing fastest. This worries both economists and the authorities, which has led to the tightening of this type of loan product.
Therefore, it is becoming more and more common for people to reject applications for consumer loans, credit cards, and other types of unsecured loans. Depending on what is being applied for, the banks state that they reject between 30% and 80% of the applications they receive.
Also read this comment in NRK: What do you do if you are desperate for money but no longer get a loan?
Comes for many reasons
There are many who simply should not borrow, because the income is too low or because they have an illicit deal with money. If you get rejected for a loan application, there is often a good reason for this.
The rejection may also be due to small details and is not necessarily a reflection of the applicant’s poor finances. In such cases, small grips can solve the flock.
Below we address the most common reasons for refusing loan applications, with suggestions for solutions for each.
Refusal due to payment note
A payment note is the most common reason why people do not get consumer loans or other credit benefits. Common mobile and power subscriptions are among these. You only receive remarks if your debts are in default and have gone to legal recovery. On their part, this is a clear signal that they take a pretty big risk if they lend you money.
- Solution: There is no other way but to pay the debt that caused the payment note. There are banks that provide loans in such cases (including Bank2), but then the money must go to refinancing the debt and you must be able to provide collateral for the loan.
Refusal due to collection cases
Banks have poor opportunities to check if an applicant has active collection cases. However, they are usually crazy about this in the application form and you are obliged to provide correct information. Lying on this is potentially punishable.
- Solution: Should the loan go to refinance the debt and you state this, many banks will be more amenable. If the collection case (s) concerns significant sums, you should still consider getting the debt refinanced, and especially if it involves expensive small loans or credit card debt.
When the minimum requirements are in the way
It happens that people who apply for consumer loans have not met the bank’s minimum requirements. The age requirement is at the lowest 18 years and at the highest 25 years. The income requirement is also variable, but never higher than a minimum of $ 250,000 in annual income.
- Solution: For example, if you are 20 years old, with an income of 200,000, you may simply have applied to the wrong bank. Seek a competitor where you meet the minimum requirements.
Other debts create problems
The government’s guidelines include, among other things, that banks should not make loans that will give you a total debt that exceeds five times your income. Here all mortgage loans, student loans, car loans, consumer loans, and other unsecured debt are included. Any debt to the state is also included, such as tax claims. The new of the year is that the credit limit you have in any credit card is included, even if you have not used the credit.
- Solution: Reduce debt before applying if you can. Consider what you have in total in debt (the bank you turned down can help you with this) and reapply for a lower loan amount. Get rid of credit cards if you have more and if you don’t need the cards. Alternatively, you can ask the credit company to reduce the credit limit.
Too many loans
You can also get a discount if you have many small consumer loans before, and any credit cards on top. Many credit conditions are a signal to the banks that you have a somewhat messy economy.
- Solution: Get all small debts collected in a larger loan. You spend money on refinancing while making your finances far more transparent. Some banks allow you to combine loans for refinancing, along with a small coin of money you may need for something else. Please note that this may affect the down payment period you are granted.
The credit score is poor
Your credit score is a calculation of how creditworthy you are and is done by so-called credit reporting agencies. Most banks and creditors will give you a discount if the score is less than 10, while a score between 10 and 20 means they will get you closer to the seams. If you have scores of over 20, consumer loans may be granted, depending on other factors such as loan amount, ability to pay, other debt, and so on.
- Solution: Try to improve your credit score. Don’t change your address too often, reduce debt if you can, avoid associating with companies with poor credit scores, try to earn a steady income, and pay bills on time. These are some of the many steps you can take to improve your credit score. However, it will take time for such grips to have a noticeable effect. You can also apply for a lower loan amount, as well as apply to several competing banks.
The universal key is to have a co-borrower
Many of the reasons for refusing a loan application can be solved by taking up the loan with another person. This is called having a co-borrower. This person then becomes jointly liable for the repayment of the loan and is not the same as having a surety.
Therefore, it is recommended that the co-borrower is someone with whom you have a shared financial position, such as your spouse or cohabitant. Some banks require co-borrowers to be spouses.
When the bank has two persons with the same legal responsibility for the repayment, this will increase the chances of the loan being granted.