March 4, 2020

Credit despite low score: Not impossible but difficult

Your Credit Checker self-assessment signals a below-average score? Above all, the industry score for banks is anything but exhilarating? A loan despite a low score is not excluded from the outset, even if your house bank graces itself. It is not easy to get a loan if the scores are below average.

But do you need a loan for an urgent purchase?


However, your chances of getting a loan increase if you are careful when looking for a loan and contact a suitable loan provider. In the first step, we want to clarify to what extent Credit Checker Score and the scores of other credit agencies influence lending among other factors.

Then we discuss how banks’ willingness to lend despite a poor score can be improved.

Finally, you get tips on which financial service providers have the best chance of getting a loan despite their low score.

Low score: effects on lending

Low score: effects on lending

Credit scores determined by credit bureaus are only part of the comprehensive credit check that banks carry out before each loan is granted. The credit check consists of three components: It all begins with obtaining information from Credit Checker and, if necessary, also from other credit agencies.

First, it is determined whether there are negative Credit Checker entries. Unfinished, not yet provided with a completion note, negative features lead to score levels between N and P. For most credit institutions, especially direct banks, the existence of negative characteristics is an absolute reason for refusal from the start. Other banks are not as strict and overlook negated traits or easy tricks.

However, the negative features that have been dealt with must not precisely relate to defaults on advance loans. The second component is the assessment of the industry score. In the case of positive, neutral or negative but completed Credit Checker entries, a score is created between the levels from A to M.

The score indicates the probability of default

The score indicates the probability of default

The value allows conclusions to be drawn about the payment reliability of the credit customer. On the other hand, a certain score does not allow any conclusions to be drawn about economic performance. Credit Checker does not save any data on income or assets.

Banks rate the question up to which score a default risk is accepted differently. Often the score may not fall below the H level. Other banks stop lending when the score drops below level D. The third component is the bank’s individual assessment of its economic creditworthiness.

Now the focus is on the economic performance of the customer. Does the customer have the ability to repay the requested loan, taking into account his personal and economic circumstances? This test does not only refer to the borrower’s income and assets.

Marital status, occupation, place of residence, type and duration of employment, maintenance obligations and others are included.

Two key figures are important for checking economic creditworthiness: attachable income and the so-called household account. The household bill is used to determine what free disposable income remains after deducting the cost of living.