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).

Traveling, making a reform or expanding your studies is easier with BBVA’s online loans: more information

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.

 

How to extend the term of your loan?

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How to extend the term of your loan.

Nowadays, it is very common to use small loans and credits to deal with unforeseen events that arise on a daily basis, or simply with the aim of being able to enjoy a specific offer or discount.

Maybe you’re interested in reading | Microloans: The reason for the identification process

If this is your case, and you have ever asked for a quick microloan, you will understand how important it is to keep in mind the day of the repayment of your loan. In Vivus, loans of between 50 and 900 € can be requested with a maximum term of up to 30 days for their return.

 

But what happens if my loan expires and I do not have the money to pay it back? In Vivus we give you solutions, and that’s why we offer you the term extensions.

What are the term extensions of a loan?

Term extensions are a resource that Vivus puts at your disposal so that you can extend the term of your credit return , and in this way, do not be penalized if you can not pay your loan on the due date.

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Example 1: € 300 loan with an extension for 30 more days

 

How do the term extensions of a loan work?

Term Extensions can be done for 7, 14 or 30 days. Which means, that you can postpone your loan repayment date by 7, 14 or 30 days , counting from the loan due date.

Maybe you’re interested in reading | What is an extension and why should I hire it?

It is very simple, if you have an open loan, whose end date is May 10, and you want to extend the term by 7 days, you will have to repay your loan on May 17, because this will be your new due date. And most importantly, it does not matter what day you ask for the extension of the term, since it always starts counting from the day your loan expires.

When to use the Term Extensions of a loan?

From Vivus we recommend responsible use of microloans, and we advise you to ask for a quick loan only when you are sure you can return the borrowed money. However, sometimes it can happen that some mistake or unforeseen, prevents us from facing the payment of the loan on the agreed day. It is then the right time to request an extension.

In this way, you extend the date of repayment of your loan and avoid incurring penalties that will cost you more expensive.

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Example 2: € 500 loan with an extension for 14 more days

 

How do I apply for an Extension of a loan?

If you want to extend the term of your loan, the first thing you should do is get in touch with us . For this you have the following options:

  1. You can access your user profile from our website vivus.es, where you will find a link to extend your credit.
  2. Simply by calling our Customer Service Department at 91-290-77-88 indicating that you wish to use an extension.

In order to extend your due date, you must make a payment that depends both on the number of days of the extension (7, 14 or 30) and the amount of your loan . Both on our website and via telephone, we will inform you without any commitment of the amount established for the extension of your loan.

Maybe you’re interested in reading | I have been denied a loan, what can be the reasons?

This payment must be made at the moment, and to do this, you can do it by card, bank transfer, deposit account, cashier or through your user profile on our website. Here we give you more information on how to pay for term extensions

In short, the term extensions help us avoid unnecessary expenses, are easy and comfortable to pay and do not incur problems with the entity, so that, once the loan is returned we want to request another one, they will not give us any problems!

The City Council signs a loan of 31 million to invest in neighborhoods, schools, cleaning and parks

The City Council signs a loan of 31 million to invest in neighborhoods, schools, cleaning and parks

  • The delegate of Finance and Public Administration in the City of Seville, Joaquín Castillo (PSOE), has signed the credit operation provided in the budgets of 2018 that allocates 31.3 million euros to investments for schools, public transport, cleaning, improvement of neighborhoods, parks and gardens or sports facilities in the capital.

El Ayuntamiento firma el crédito con Caja Rural del Sur y Bankia The City Council signs the loan with Caja Rural del Sur and Bankia AYTO DE SEVILLA

The transactions have been subscribed by Caja Rural del Sur for an amount of ten million euros at a fixed interest rate of 0.50 during the amortization period, and with Bankia for an amount of 21.3 million euros with a rate of fixed interest rate of 0.60, as reported by the Consistory in a press release.

This operation represents an average credit cost of 0.56 percent, an index that is well below current market rates and better conditions than those achieved in recent years by the country’s main administrations. In total, twelve proposals were received in the public tender that reached 217.7 million euros, compared to the 31.2 million euros that were requested.

The City Council’s general budget for 2018 links 31.2 million euros in investments to this credit operation following the same model that was already executed in 2017. In this sense, with the initialed operation, nine million euros are activated, among other measures. euros for investments in neighborhoods of the Planning Department, more than 800,000 euros for parks and gardens; 1.5 million euros in investments by Lipasam; or more than three million euros for schools and municipal buildings.

These resources, moreover, are not strictly linked to the end of the year, so the investments can be executed throughout this year and the next without it being necessary to re-enter them in the budget.

For his part, Castillo explained that “it is an important agreement that makes it possible to streamline operations of general interest for the city of Seville, contemplated and planned in budgets with the utmost rigor.” These are operations that facilitate investment in matters of public interest. maintaining the line of efficiency and budgetary stability that have allowed, for example, that the City Council of Seville was the first of the great consistories of the country to leave behind the crisis according to the competent fiscal authority “.

In this sense, Seville maintains with this operation a situation of “financial consolidation and balance, enhancing investments, as well as debt planning that places the city with one of the indexes of indebtedness per inhabitant of reference in the country and the lowest of the last decade. ” The year 2017 closed with a debt of 325 million euros, which meant a reduction of 80 million euros compared to June 2015, the beginning of the mandate.

The forecast for 2018, including the approved credit operation, is to close the year with a debt of 312.2 million euros, which will have reached a new reduction of 13 million euros. In 2008, the outstanding debt amounted to 420 million euros, a figure that was rising to reach its highest level in 2012 with 485 million euros. Since then, there has been a particularly pronounced decline in 2015 and 2016.

This situation of sanitation and the management carried out has allowed the Seville City Hall to be recognized by the Independent Tax Authority in the last report issued by this body under the Ministry of Finance for the adequate compliance with the expenditure rule, obtaining a surplus in the last two years and the level of indebtedness much lower than the limits established by the regulations.

“We have managed with an efficient management and with a rigorous work to make compatible the reduction of the indebtedness of Seville, that in these moments is very low, with the development of formulas that allow the execution of the necessary investments for the city”, has concluded the delegate .

 

Understanding the Basics of Banking: Banking Example #1.2: Loan & Deposit Transfer (w/ Colors!)

Image result for loan deposit and transfer art Loan & Deposit Transfer (w/ Colors!)

Example of a loan and deposit transfer. Coloring of cells inspired by commenter Geoff at pragcap.com (an attempt to make it more clear, by matching assets with their related liabilities across balance sheets). Otherwise this is exactly the same as Example #1. Each color represents a financial entity: loan, deposit, etc. Cells with the same color represent two views of the same entity, one from the creditor’s viewpoint (left hand column) and one from the debtor’s viewpoint (right hand column). Example #10 demonstrates how these different financial entities are interrelated but have a degree of independence from one another.

Setup: one central bank (CB), two commercial banks A and B, and one person x. No reserve requirements or capital requirements and everyone’s balance sheet initially clear (empty).

Initial balance sheets (for CB, A, B, and x):

CB, A, B, x

Assets Liabilities
$0 $0

Balance sheets after x takes a $100 loan from A:

Bank A

Assets Liabilities
$100 loan to x $100 deposit for x

 

Person x

Assets Liabilities
$100 deposit at A $100 borrowing from A

Balance sheets after x transfers deposit from Bank A to Bank B:

Central Bank

Assets Liabilities
$100 reserve overdraft for A $100 reserve deposit for B

 

Bank A

Assets Liabilities
$100 loan to x $100 overdraft at CB

 

Bank B

Assets Liabilities
$100 reserves $100 deposit for x

 

Person x

Assets Liabilities
$100 deposit at B $100 borrowing from A

Balance sheet after Bank A borrows $100 of reserves from Bank B and repays CB the overdraft amount by the end of the day (note: Bank A could have borrowed from any other bank, the money markets, the Central Bank’s discount window or by attracting transfer deposits, but I’ve chosen to show the case where it borrows from Bank B):

Central Bank

Assets Liabilities
$0 $0

 

Bank A

Assets Liabilities
$100 loan to x $100 reserve borrowings from B

 

Bank B

Assets Liabilities
$100 loan of reserves to A $100 deposit for x

 

Person x

Assets Liabilities
$100 deposit at B $100 borrowing from A

Note that at the end, the central bank’s balance sheet is again clear, yet there are $100 of reserves on loan to A from B. To see a similar case where the deposit transfer is accomplished with a purchase instead, see Example 1.1.
I recommend this writeup on the monetary system by Cullen Roche for more information. Also, I must credit this article. Also, this site animates balance sheets, and has an especially good macro page with consolidated balance sheets.  Look at this to see this same example with reserve requirements, and here to see it with both reserve and capital requirements.

What is a blank loan? Get the answer here .. – Kviklånet.dk

Blank loan is a loan that has been approved and which you can use for whatever you want. In other words, the bank or finance company does not look at what it’s supposed to spend the money for – it’s all up to one’s own. The only loan the broker concentrates on is whether they think they are able to repay the loan or not – if you use the money for a used car, or holding a huge family party is quite subordinate.

Why saw a blank loan in comparison to a regular loan?

Some may not want to understand what they spend their money for and therefore choose a blank loan. It may also be because you may want to buy several things, but only borrow the money somewhere. For example, if both want to travel as well as have a new flat screen TV and a new laptop it may be easier to have a total loan – you may be able to achieve longer maturity than if you choose to finance the thing separately.

Some also choose to use a blank loan to finance older cars – the interest rate is often higher, but you do not have to pay for registration costs and can only comply with the statutory liability insurance on the car. In the case of ordinary car loans, the bank usually has a mortgage in the car and therefore requires a safe insurance so that they are covered if you are so unlucky to completely damage your car.

In relation to a standard car loan, the maturity of a blank loan can be considerably longer – in fact up to 12 years, for example. finance the purchase of a veteran car, which is typically a car that you keep. Blank loan is also used to eradicate old debts. Some expensive account cards in several places, there can be a lot of money to save by collecting the debt in a loan at a lower rate.

Before considering a blank loan, however, consideration should be given.

First and foremost what you are going to spend the money on – if it is a purchase of a new car, it is often cheaper to record a traditional car loan. If it is a loan for consumer goods, it is important to consider how long you enjoy the product you want to acquire. For example, you buy a nice flat screen TV for 40,000 Kr. it is hardly likely that you have the same TV after 10 years – in other words you may risk paying off on a thing that has long gone to death. Likewise, with the financing of a dream vacation – you probably agree with some good memories and some great color photos, but it’s hardly fun to deduct a holiday that took place 2 years earlier.

Of course, the interest rate, maturity and performance are important to know before choosing a blank loan – since the bank does not have collateral in the form of a mortgage or similar, interest rates are often relatively high compared to traditional loans for consumption. An alternative to a loan loan is a cash credit – it is a credit that can be consumed on a regular basis and is also deducted on an ongoing basis. For example, A cash credit of 50,000 kr. buy one item for 10,000 DKK and decide how quickly you want to deduct it consumed. However, you must pay interest on the debt you have incurred. That way, you can pay more on a good month, but perhaps do not pay for Christmas where the budget is often tight.

Both banks and finance companies offer blank loans, but it is usually only the bank that offers a bank credit that is linked to one’s payroll. If you are considering a loan or credit, it’s a good idea to spend some time online to get an overview of the different products offered. Often, you can make online calculations that can simulate how much a loan will cost

 

Facebook loan groups: So risky is that | Samlino.dk

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A new worrying way to raise loans has emerged. Private individuals find each other through Facebook groups to exchange loans without the established banks and loan providers. But it can have many consequences if you can not pay the money back.

It has become modern to stand away from the established companies and their services. Several have thus become aware of the alternative options that the part economy has opened up for. The Danes are fine at finding each other and finding a solution without the market.

It may work smoothly. For example, at GoMore, a car owner can rent a car for a period of time to another individual. In this way, we as society use our resources better, so the car does not just stand and collect dust in the garage.

But recently, there has been a great deal of focus on an alternative loan form that has not previously been particularly well known. You can now borrow money through social media, more specifically via closed Facebook groups. In fact, it is so prevalent that there are more than 14 closed Facebook groups, all of which have the purpose of lending money. In addition, we have examined the groups and found that these 14 groups on Facebook all have the same administrator. Pretty nice, right?

This is not just a red flag, but testifies to the fact that it is most likely not just friendly private individuals who would like to help people in need of a loan. But there are more small businesses that systematically lend money to earn money.

Cloudy interest rates can cost you a lot

The typical user on these pages is people in a bad situation who struggle to make everyday living economically, registered in the RKI or who are in urgent need of help. Below is a typical quote taken directly from a loan page.

“I’m acute and lacking 4000kr. Otherwise, I will be thrown out. I have not received housing support yet. I have just moved in and the landlord is not talking. “

Other users may now offer a loan to a pressed person with an interest which they themselves determine. But this is where it typically goes wrong, because loan providers typically set interest rates between 50-100% for first time borrowers. In special cases, the interest rate can be up to 200-300%. These soaring interest rates are far above the interest rate on the most expensive credit loans.

If you are in a depressed situation and therefore take a loan through these Facebook groups, put yourself in a position where you will be able to pay it twice or more back the following month. Therefore, we absolutely do not recommend that you make this kind of loan. Instead, call your bank or compare the cheapest consumer loans through our comparison portal if you are in a bad financial situation.

Be aware before lending money

It is not only borrowers who may risk being exploited in these private Facebook groups. We have talked to a woman who has borrowed money through one of the groups. She says that she has borrowed 7,300 kroner to 3 different individuals with 100% interest. The problem is that she is very hard at getting her money back. Typically, they do not answer or apologize for why they can not pay her back. Therefore, she has chosen not to lend money again.

She also states that even though she has not returned her money, she does not give up whether she should go out and pick them up.

These groups, therefore, are not only a bad idea for borrowers but are also incredibly uncertain for those who lend money. Many of the individuals who are in a situation where they have an urgent need for money may find it difficult to pay back the amount with the high interest rate again. In other situations, some people will take advantage of the easy way to get fast money without having the intention to repay the amount.

This has, among other things, resulted in more loan groups creating posts where they can exhibit the bad payers. One of the loan groups has made a statement with the following text:

“This suggestion is meant that we can all beat bad payers so that we all in the group can chase them together”

At the same time, in this group, you agree that both lender and the rest of the Facebook group must publicize you and your profile as well as contact your friends and family if you do not pay. This means that you agree that people you do not know can come and knock on your door if you are in a situation where you have not paid the amount due. Therefore, we advise you to consider if you have considered borrowing through these loan groups. It can be a big risk to take if you are not sure if you can pay back. In addition, you can find much cheaper loans. You can compare loans through our site and save a lot of money by choosing a lower interest rate.