Most consumers understand a bad Credit Bureau to have at least one negative entry in their Credit Bureau information. In fact, even a weak score without a single negative characteristic can lead to a loan refusal if the lender uses the automated rating of the probability of default as the basis for his credit decision. A small loan often means a loan of up to five thousand USD, but the term can also serve as a synonym for any form of consumer credit.
How does the negative Credit Bureau affect lending?
The notion of many consumers that a single negative characteristic would make any borrowing impossible is incorrect. In fact, some financial institutions reject any small loan applied for by customers unknown to them despite poor credit, while other lenders examine the specific case more closely. This makes it possible to grant loans if a soft negative entry was forfeited a long time ago and the borrower believes that his financial position has changed since then.
In addition, despite poor Credit Bureau information, consumers increase the chances of a small loan if they apply for the new loan from a bank with which they already have a business relationship or where they have at least taken out a loan and repaid it correctly in recent years. In this case, the internal credit rating data is also considered relevant for the credit decision.
Another option is to take out a loan with a co-applicant or provide a guarantor if a small loan is required despite the bad Credit Bureau. Many lenders prefer the second credit customer to a default guarantor, since the legislator places very high demands on the effectiveness of a guarantee. To borrow together, people do not necessarily have to be related to one another or live in a common household.
Small borrowing without Credit Bureau
As an alternative to a small loan despite poor Credit Bureau, taking out a loan without Credit Bureau is a good option. Appropriate Credit Bureau-free loans are granted by Swiss and Liechtenstein banks, with the maximum permitted loan amount usually being limited to USD 3,500. These loans are not only granted without obtaining Credit Bureau information, but are also not reported to the German credit protection agency after payment has been made.
Switzerland has a system of credit protection comparable to Credit Bureau, but this generally has no effect on borrowers from Germany, as only a few of them have already taken out a Swiss loan. However, the registration of the loans taken out with federal banks means that credit customers cannot overcome the limit on the loan amount by simultaneously borrowing from several financial institutions.
For small loans despite bad Credit Bureau over amounts of more than 3500 USD, the engagement of a credit broker is recommended, since he can also obtain higher loans for Swiss and Liechtenstein financial institutions for his clients. The seriousness of a credit brokerage can easily be seen from the fact that, despite poor credit, it brokers the small loan without calculating any preliminary costs and only calculates a brokerage fee if it is successful.