How to get your credit score up
How to build credit

How to get your credit score up

Loan Rejection:

Loan applications get rejected every day. In some cases, the people whose loan applications are rejected have no idea why their loans are rejected or do not understand how it works.

Lending institutions in Nigeria like Creditville and all over the world have certain requirements that have to be met before a loan request can be approved.

Prior to giving a loan, most loan companies would conduct a credit check to ascertain the credit worthiness of the customer. It is during this credit check that your viability as a customer would be put to test. In as much as companies want to book loans and credit analysts want to meet their targets, they are also extremely scared of bad loans and so would decline your request at the slightest red flag.

You must therefore, make sure that there are no possible red flags to come up across your name when a credit check is being conducted.

Here are some of the reasons why your loan application might get rejected:

  • Bad credit score: A credit score is a number that depicts a customer’s credit worthiness.  When a credit check is carried out, a credit score is given for the result of the credit score.  A credit score is primarily based on a credit report information typically sourced from credit bureaus.

Lenders look at your borrowing history, usually in the form of your credit scores, when you apply for a loan. Most lenders want to see a solid history of borrowing and repaying loans. However, you might not have borrowed much, or you might have experienced some challenges and actually defaulted on loans in the past.

To ascertain your credit score, Creditville Limited checks for a list of things.

Things Creditville Limited checks include:

  1. Defaults onloans
  2. Returnedcheque
  3. Generalperformance in previous loans
  4. Existing loans with other banks or financial institutions.
  5. Loan repaymenthistory.

For full article on credit checks and its importance, use the following link: https://creditville.ng/what-are-credit-checks-and-why-are-they-important/

  • Too many repayment history your account: One of the information that a credit check would help the on loans get is the number of loans on your General performance and the remaining amount to be repaid for each of them. If you have multiple loans on your account Returned cheque may feel that your account is a high risk account and so your the be declined. Sometimes, banks or financial institutions may fail to upload proper documents that show that you have cleared your loan with them which is why it is important that you follow up on them to get your name cleared from their defaulters list after repayment is completed. Also, you can request for “a letter of non-indebtedness” after completing every loan repayment so that you can present in cases of incomplete data if you are a victim.

If you present a letter of non-indebtedness to the loan company you are trying to secure a loan from, it would stand as evidence that will clear you from the incomplete data provided by the credit check.

  • Not enough income: Every loan company has its rules. Depending on the loan company and thekind of loan, certain amount may be seen as too small for inflow. For example,Creditville Limited gives out a minimum of 200,000 and so you need to earn atleast 70,000 (seventy thousand naira) to access the minimum amount.

If your salary does not meet this cap and you apply, your application will be rejected because repayment would be an issue in the long run and loan companies do not want to have such issues.

Also, you may be qualified for 200,000 loan with your cash inflow but you might want something higher which your salary or business cannot take at the time.

  • Lack of registration (Applies to business loans only): For business loans, one of the most common requirements is that your business or company be registered with corporate affairs commission. If your business is not registered, you would notbe able to acquire a business loan. Also, if your business is registered butnot up to the number of months for which your statement of accounts is requiredthen the loan would most likely fall through.
  • Not trading with your business account: For business loans, it is a necessity that your business or company account shows enough inflow of cash to be able to access whatever amount you are applying for. Your turnover must be significantly high enough to accommodate whatever amount you are applying for.
  • Inability to get a suitable guarantor: For guarantor loans, the eligibility of the guarantor is a key factor in securing the loan. If the guarantor does not meet the requirements as stated by the company, your loan will most likely not go through.
  • Inability toprovide straight answers: Credit analysts are trained to read in between thelines. Which is why they would most likely perform the KYC (Know Your Customer)exercise. If a credit analyst asks you certain questions about your statementof account or certain discrepancies and they sense anything shifty from yourbody language or your answers not adding up, your loan would most likely notexceed their table. Inability to reconcile your answers questions yourintegrity and your ability to repay in the long run.
  • Contract ofemployment: If you are a contract staff then you most likely would not get aloan unless your contract termination date is far from the date which the loantenure would end. Loan companies like to be extra careful with contract staff since they are outsourced in most cases and not actual employees of the organization in question.