Consumer credit and common reasons for refusal

Consumer credit can be, and has been, a good solution for those who find themselves in a situation where additional funds are needed. Consumer loans are currently offered in Latvia by both bank and non-bank lenders, so they are widely available and easily accessible.

Often such a loan is needed to settle urgent matters, so it is important to get a loan as soon as possible – it can take a couple of days for banks to process such a loan, but it will usually take a couple of hours for non-bank lenders. But in order to get such a loan so quickly, it is essential to comply with all the conditions. Let’s take a look at the most common reasons for consumer credit denials so you can make sure you get the funds you need when you apply.

Reasons why a consumer credit can be denied

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Consumer credit can be denied for a variety of reasons. The most common are:

Insufficient income 

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This is one of the most important reasons for denial because lenders want to lend money to borrowers who can repay it. Your income level plays a big role in the lender’s decision, so if you have a solid job and a salary that will allow you to make enough monthly payments (no more than 40% of your total monthly income), you are unlikely to be denied a consumer credit;

Bad Credit History 

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Both bank and non-bank lenders are reluctant to lend money to someone who has a bad credit history. There is a Black Borrower Register in Latvia, where creditors have access to information about borrowers with outstanding credit obligations. If you are on this list, you will not be granted a consumer credit. To improve your credit history, try to pay your monthly installments on time and not take on new credit before you pay off your old one;

Too Many Credit Liabilities

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If you have taken out several credits in a short period of time, some lenders may be very cautious about giving you another. As non-bank lenders are unable to verify such information, you must understand that too much credit can significantly worsen your financial situation;

Previous Refusal

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If you have already received a refusal, the potential creditor will take this into account when considering your new application. However, if you have improved your credit history and made all your payments on time, you may be granted a small amount of consumer credit;

Incorrect information in the loan application

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One of the most important aspects of granting a loan is providing correct information in the loan application form. This includes the correctness of your personal code and home address, as well as your bank account and mobile phone number. Incorrect information will be the reason for denying you a consumer credit.

Lenders take into account different aspects when assessing your credit application, so make sure that you have settled all your previous credit obligations before applying for a consumer credit, that your monthly new loan payment will not exceed 40% of your monthly income and that the information you provided is correct. Borrow responsibly!