Do you want to buy a car, get married this year or do you need to renovate your house … there are many reasons to ask for a loan, but what does the bank have in mind to grant a loan? . You go to your trusted bank, talk to the branch manager who is your friend and grant it to you. If you see that he resists, you can give him a ham from those in your town, and, incidentally, that conditions improve …
No, although sometimes we think so, things don’t work that way. When you are going to apply for a loan from a bank, they ask you for all kinds of documents that prove that you are in a position to return that money. Your payroll, your usual fixed expenses, or your latest income tax returns are data that illustrate the health of your finances. Depending on this status, you will be granted credit or not, and the conditions will be more or less favorable.
What do banks look to grant a loan?
Knowing someone who works in a bank does not make you get better conditions. Banks take into account all the information they can access to analyze and evaluate the risk of granting a loan. Your friendship with a branch manager or the good relationship you have with workers will not make it easier for you to access financing or improve conditions.
It is also important to know the income statement or personal income tax because it allows you to get an overview of your income. Not only those who receive you through salary, but if you have rental housing or receive any benefits, etc.
Simple notes and writings. In case of having another property, the bank takes into account if it is free of charge, what you pay for it, how much you have left … everything is important to be able to make a study of your financial status. In case you are someone’s guarantor, the bank also checks the status of the collateral and what you have secured the type of loan.
Credit score: impartial information about your finances
All these data provide customer information to the banks, but only those operations that they do with that entity or the public documents and files that anyone can access. However, if you have other operations open with another bank or financial entity, the entity to which you are applying for the loan does not know. This can negatively influence both you and the bank, since you may have income from another source, have savings in a different account, or have another loan in another entity.
Therefore it is important to have all the necessary data so that the state of your finances is as impartial and reliable as possible. With the Good Financial FinScore credit score, you can get a score from 0 to 900 that tells you about your borrowing capacity. It is beneficial to know this score in order to apply for a loan, since it gives you greater bargaining power and you can get better conditions.
When asking for a loan
When asking for a loan it is better to know if you can really deal with it and you will not be overwhelmed paying it. It is also good to know because you can choose another way of financing, if you see that they do not give you adequate conditions to your credit score. You simply need to download the free app of Good Financial, add all your bank accounts and the FinScore is calculated automatically.
Thanks to this, the process is simplified and transparency is provided. A new way of being aware of our borrowing capacity and making good use of it. Oh, and if you want to ask for a loan, you can also do it inside Good Financial or through the Good Financial website … all advantages!