How the scoring influences the granting of a loan

How the scoring influences the granting of a loan

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Scoring is a system with which entities determine which customers are safest to lend them money

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Behind every loan granted or denied there is a valuation process in which the bank has studied our profile as a customer, that is, our ability to repay the money that will be lent to us. This process is far from capricious and attends to the valuation of numerous parameters that make the client a better or worse payer; determines, therefore, the risk of default that the banking entity will assume when granting this loan.

Thus, to know what is the risk involved in lending money to a specific client, most banks in Spain use scoring, a system that measures a series of objective parameters and gives each person a score that helps the bank decide if grants or not the loan and, in some cases, also determines the interest rate associated with that loan.

Therefore, as a client you are interested in knowing what is sought in a ‘good payer’ and how this valuation system works .

What is scoring based on?

Scoring is a system that relies on statistics to try to determine our ability to pay based on our personal and financial data and, very importantly, based on the payment history of clients with a profile similar to ours. And what data are in which the scoring is fixed? Let’s point out the most common:

  • Level of income
  • Assets owned: real estate, vehicles.
  • Linkage with the bank and contracted financial products.
  • Stability of employment: seniority, type of contract, etc.
  • Profession.
  • Amount borrowed in relation to monthly income.
  • History of loans and payments.
  • Marital status and children.
  • Age.

For example , when we apply for a loan of € 10,000 to our bank, it is usual for it to use the scoring system to check how other clients with a profile similar to ours (income, assets, employment, etc.) have responded to that loan. In this way, the bank can know in advance what has happened in loans involving amounts of money and customer profiles similar to our case.

Of course, each client is a unique case, which is why in the scoring the payment history we have is also very important. If we are up to date with our debts and every time we have requested a loan, we have returned it without any type of incident, this will have a favorable effect on our scoring; On the contrary, if we have a history full of delays and we still have outstanding debts, this will work against us.

In any case, the result of the scoring that associates us as clients only determines the probability that we will repay the loan, so this score is one more element of decision that the bank can use to grant us the loan or not.

Therefore, based on our score , the entity can grant us the loan, deny it or, in some cases, ask for more payment guarantees and increase the access requirements to that loan. And this is where the negotiation of the loan comes in, because if the bank is not very clear about our capacity to repay the amount of money that we are requesting, it can demand that we present a guarantor who will answer for us in case of non-payment; In addition, in profiles with a not too good scoring, the interest associated with the loan is usually higher (remember, more interests the more risk).

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What can you do to have a good scoring?

Getting a good scoring is not something that is achieved overnight. Beyond the employment and the income that we have, in order to improve our scoring score it is fundamental to be rigorous with the payments and to show a client history as serious as possible.

Needless to say, if we are included in a file of defaulters , our scoring will score very low and we will have a hard time accessing a loan.

Finally, it is important to emphasize that our score in the scoring system will not automatically grant or deny the credit, but it will be a weight factor that the bank will weigh when it comes to giving us that money or not.


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