Many everyday business transactions depend on scoring, ordering on account in the online shop, mobile phone contracts and credits. healthdegreesu.com for further explanation
Which tests are carried out by the house bank?
The credit check for a credit transaction is the assessment of the applicant. In principle, this check is carried out with every application for lending in order to prevent default risks. Only when the house bank can ensure the repayment of the loan is it granted. In addition, the credit institutions are also required to check the creditworthiness of the interested parties in accordance with the guidelines of the banks’ capital requirements under Basel II.
To avoid high losses by credit institutions by granting loans to people with negative creditworthiness and even by applying for insolvency, provisions have to be made in relation to the credit risks. The provisions to be created increase as the risk of a transaction increases. The interest rates for loans are therefore also based on creditworthiness, since consumers have to bear the expenses for the higher provisions through higher interest rates.
Carry out the credit check for the loan
In order to carry out the credit check for the loan, the bank needs some information from the applicant, such as the amount of income, the sum of the monthly expenses and the sum of the other liabilities. To do this, the borrower must generally have completed a self-disclosure form. At the same time, however, the corresponding income and expenses must also be shown on the basis of receipts (pay slips, income tax notices, transcripts of existing loan agreements).
When all documents are complete, the credit check can be run. After comparing the client’s income and expenses by the credit institutions, the Credit bureaudaten are finally evaluated. It gives the institutions information about which other loans exist and whether they have been regularly serviced in the past. If this is not the case, for example, a loan could not be repaid, these are negative characteristics that usually lead to the loan being rejected.