Improve Your Chances of Getting a Consumer Loan by Exploiting the Automatic Credit System
There is no standard score for consumers such as the beacon Fico score which includes 5 principal criteria (personal credit, stability, debt ratio, net value, occupation and professional status). Most banks and financial institutions use their own system, attributing a more complete credit score to applicants. Those systems process client's data when a consumer applies for a loan, and categorizes the file based on the global score obtained automatically.
When you decide to apply for a personal loan, you have little control over the five criteria, except for the personal credit report which happens to rank first, and is the most important one. If the applicant is shown to have good credit, then there shouldn't be any problems when applying for a loan. However, if the credit rating is average or low, without it being disastrous, there are ways to improve the chances of being accepted for a loan, but you need to understand the automatic system that analyzes credit.
Banks try to minimize the participation of actual credit analysts by establishing a discriminatory system which automatically filters a demand in the category "accepted", "refused", or "to be reviewed by an analyst" (also known as the gray zone) and is based on the total score obtained. That way, the system executes the majority of the work and banks save big by not having to hire expensive credit analysts. The analyst is only there to review files which fall in the gray zone.
Automatic systems are also in place to speed up the process of credit analysis in order to provide a quick answer to applicants. Great competition exists between banks and other financial institutions for the time response. As a matter of fact, many clients will choose a bank offering a quicker response, without taking into consideration the interest rate applicable on the loan.
During the application process, applicants enter their personal information in the system, and when completed, the system analyzes the whole request based on the five criteria. If the information of the applicant fulfills the acceptance criteria of the automatic system, the response will be sent directly to the applicant, often with the condition of showing proof of income of the amount declared. The file is not seen by any credit analyst since the decision was already taken by the system. It is therefore possible to exploit these systems and increase the chances of being accepted, or at least avoid an automatic refusal. Here is how:
The applicant cannot modify his own credit report, but he can round up the time at job and the years at current address (showing stability). This data is rarely verified by banks and weighs considerably in the final credit score. By doing this, the applicant can improve his total score without entirely lying on his profile. Rounding up your personal income is however not recommended. Banks will often accept a file with the condition of providing proof of income, and failing to do so will put the file under review.
Another option is for you to apply a good down-payment in the case of a mortgage or the purchase / lease of a vehicle, because the automatic system will see equity on the collateral and might send an automatic acceptance before someone reviews the file. Down-payments are in fact the only way applicants can compensate for bad credit, or even reverse a negative decision.
Many companies are specialized in creating these automatic systems, and almost all financial institutions have them. Even though there is no standard rating, the five criteria seen above are always present during the calculation of the total score. Applicants can then use these techniques, at any financial institution, in order to improve the chances of being accepted when applying for a loan.