Credit rating entry completed, do I get credit now? The answer to this question is not a clear yes or no. Unfortunately, the answer is sibylline: it depends. Lender bank helps borrowers with negative, completed credit rating entries to obtain adequate loans. The lending depends on the type of negative credit rating entry with a settlement note, the existence of certain collateral, the income of the applicant and the amount of the loan.
Last but not least, a promising loan request depends on whether the right financial service provider is being addressed.
Type of credit rating entry completed
If you are looking for a loan despite having completed a negative credit rating, you will often find phrases like “it must be an easy entry” or a “soft credit rating entry”.
Under no circumstances should there be a “serious, hard entry”.
It is of course best if the credit rating entry no longer appears after completion.
Unfortunately, the negative feature basically still appears in the file, but with a completion note. Entries about settled claims are deleted after three years.
Paradoxically, they can say hard credit rating entries “good bye” under certain conditions.
Affidavits and / or arrest warrants can completely disappear from your credit file, and here’s how:
- Pay the claim.
- Have the creditor confirm the payment.
- Go to the local court with your receipt, which will keep your debt register.
- Apply for the deletion and ask the registrar to publish the deletion to the credit bureaus.
- Present the payment receipt and the cancellation documents to credit rating and other credit agencies.
- The creditor of the claim paid should do the same.
- Ask for removal from the record.
The hard, negative credit rating entry is now out of the world. In certain cases, timely action also helps. Untitled claims will be deleted immediately if they are paid within six weeks and the settlement to credit rating is coming within the same period.
The claim may not exceed USD 2,000. In all other cases, the problem with the visible but completed credit rating entry remains. Some credit institutions may forgive a merchant invoice that was initially not paid despite two reminders, but was ultimately paid, or the late cleared invoice from a telecommunications company. The same may apply if a payment order has been issued and the claim has then been settled immediately.
Smaller amounts are also often considered less serious, especially if there is a conclusive explanation for the late payment. On the other hand, the situation is different if a loan was legally canceled due to late payment and the outstanding amounts were possibly only paid after issuing an order for payment or an enforcement order. In such a case, all banks are likely to be very reluctant to lend again.
To provide collateral
The chance of a loan with a completed credit rating entry increases significantly if collateral is available. Auto loans are a mass business. If the financed vehicle is transferred as security, almost all banks are ready to grant loans for harmless credit rating entries. The willingness to grant loans is further increased through the use of own funds. Own funds improve the intrinsic value of the transferable vehicle.
Example: A certain new vehicle loses 20% to 30% of its value in the first year.
In the case of full financing from a loan with a term of between 60 and 84 months, the bank must expect loan defaults if the loan is not repaid properly. The value of security is no longer sufficient to cover the default risk, especially in the early days of the loan. The situation is different if the lender has 30% equity. Now there is a realistic chance that the respective residual debt will be covered by the current market value of the vehicle. Other collateral is life insurance, savings contracts of all kinds or securities accounts.
What about mortgage lending if a non-serious negative entry is settled by paying the underlying claim?
Perhaps the applicant does not get the best interest rate offers. However, the chances of lending per se are good. The home is an ideal security. Home finance is rarely given to just one person. Mostly, married couples or life partners take out the loan together. If the co-signer has a good credit rating without credit problems, so much the better. With home loans, a decent equity component cannot hurt.
Full financing or 120% financing, on the other hand, can be difficult if the negative characteristics have been completed but still exist in the file. Anyone reading an article on collateral for loans in difficult cases will sooner or later come across the recommendation to provide a guarantor. From the perspective of the banks, solvent guarantors or co-signers are ideal. They effectively reduce a credit default risk to zero.
However, guarantees are not without problems for both the guarantor and the borrower. The guarantors are often close relatives or good friends. Some good friendship has already broken down because of a guarantee. Not to mention negative economic consequences for the guarantor and the borrower. It is not for nothing that it means “give better than guarantee”.