Can You Get A Loan With 450 Credit Score?
The bank’s decision on issuing a loan depends on the value of the credit rating. The indicator is calculated based on the user’s credit history and additional information that borrowers provide to banks in the application form, in documents and certificates. Credit bureau calculates the credit rating of users based on the data contained in the credit report.
What is a scoring score in a credit history?
Previously, a loan application from a client was considered by bank loan officers. Based on the information provided, the specialist made a decision on the possibility of issuing a loan. It was a long time and there was a risk of mistakes and a biased attitude towards the client.
Due to the development of automated technologies, banks have begun to use a scoring system for calculating the client’s creditworthiness. The system is used when issuing small loans, if a large amount is required, in addition to the scoring calculation, the bank’s specialist makes a reasoned judgment, and the application is processed by the credit committee individually for each borrower.
Credit rating is an indicator of the borrower’s solvency expressed in digital format. The higher the score, the higher the probability of application’s approval. Even with a zero credit history, the borrower will have his own rating. It will depend on gender, age, place of work, position, availability of property, etc.
If the client has already used bank loans or issued loans to payday lending services, the rating will depend on the quality of servicing their debts. The calculation of the borrower’s credit history rating is carried out by the credit bureau. When ordering a report, the user will be provided with information.
What is the maximum credit rating?
The borrower’s credit rating is calculated so far by the largest credit bureaus. Scoring calculation systems in different credit bureas are different, so the maximum score also varies depending on the company.
The borrower’s rating can be calculated according to three scales:
Depending on the method used, the indicator for the same borrower may be different.
What should be the credit rating for loan approval?
On average, in order for a loan to be approved, the credit rating must be at least 600 points.
For banks, the score calculated by the Bureau is not the main criterion when making a decision on issuance of a loan. Lenders independently calculate the borrower’s rating, taking into account his credit rating and additional information found from the application. If the scoring score is more than 1,000, the loan will be approved by the bank. The scoring score is less than 250-300, for example, 111, which means a low probability of loan approval.
What reduces the quality of a credit rating?
Delays affect the assessment in the most deplorable way, while losing the most points. Additionally, the rating is lowered by fines accrued for delay. However, this is not the only possible reason for the fall of the personal credit rating. For example, it may decrease if the borrower attracts too much loans.
An unfavorable influence is also exerted by too many loan applications sent in a short period of time, even if they were not satisfied. For banks and other lenders, this is clear evidence that the borrower is in dire need of funds and may not fulfill his obligations due to their absence.
The rating may also fall due to the presence of court penalties on payments, and not only credit. If a person has not paid alimony or housing and communal services for so long that he was sued, in case of non-execution of the decision on compulsory collection within 10 days, a corresponding entry made by the management company or the bailiff service may appear in the credit history. This is not reflected in the personal credit rating in the best way.
Is it possible to correct the credit rating?
Despite the fact that negative entries, if they are not made by mistake, cannot be changed or deleted from the credit history, any borrower can correct his personal rating by raising it to a good level. How to do it?
The credit rating value is calculated from the cumulative value of all credit history records. If there are more positive entries, then the negative will not dominate. However, it will take time and some effort to fix it. But it will bring a guaranteed result.
There are several ways to improve the quality of your credit history and, as a result, the value of your credit rating. Already, depending on the state of the credit history, choose one or more strategies:
- eliminate all delays. Without this, all other actions will be useless. Also, if possible, active loans should be repaid.
- close active loans. Perhaps the low credit rating is associated with excessive creditworthiness. In this case, it is recommended to gradually close loans until the credit load decreases and the score increases.
- take out new loans. It is possible to increase the rating due to new loans on the terms that the banks agree to. An open credit card is best suited for this. If you observe the grace period, restoring the quality of your credit history will be quite inexpensive. It is also possible to issue small loans for a short period. In any case, the main condition for correcting the score is the prevention of delays and careful compliance with the payment schedule.
- submit a request to challenge the credit history. If there are inconsistencies or incorrect information in the credit history, there are grounds to suspect an error or even fraud. In this case, you need to submit a request to challenge it. The Bureau will check and, if the error is confirmed, correct the incorrect information.