All banks and credit institutions check your creditworthiness if you want to take out an installment loan. If you have your finances under control, a regular income and a permanent position, nothing stands in the way of an installment loan. However, if one of these cornerstones wobbles, for example if you are self-employed or already have further installment loans, it may become difficult with an installment loan.
With a loan without credit check, borrowers with little chance of a conventional installment loan hope for a loan. In the following, we want to clarify whether this makes sense and what pitfalls lie behind a loan without credit check.
Can a loan go without credit check?
Installment loans in the country
If you need a loan in the country, you can either contact a bank or savings bank directly or a financial intermediary.
In the country, banks generally always obtain credit check information before granting loans. So it is with banks and credit institutions as well as through financial intermediaries is not possible to get a loan without a credit report.
However, credit check alone is not the decisive criterion when granting loans. An entry at credit check is not automatically a KO criterion. The term creditworthiness encompasses much more than just credit check information. Banks evaluate your creditworthiness based on various factors such as:
- Employment Type,
- Collateral Loan,
- existing further installment loans or
- other financial obligations and expenses such as maintenance payments
The additional credit check information obtained gives the bank clues about your payment behavior and your financial behavior. So whether you have always paid bills on time, whether you have overdrawn many credit cards or your checking account. The credit check is therefore only part of the bank’s credit check.
Why does the bank ask for your credit check score?
The bank needs to check your credit rating when granting a loan for several reasons. First, it uses it to check whether you can afford the loan and its installments. On the other hand, with the credit check, the bank weighs up the risk of receiving their money back. The better your credit rating, the lower the risk from the bank’s perspective that you cannot bear the credit installments and the more likely it is to grant a loan. Asking credit check gives the bank the security that you are a good borrower and can pay the monthly installments financially.
Accordingly, the bank would take a high risk with a loan without credit check. Of course, she can also get an insight into your finances through proof of income or bank statements, but only the credit check information tells the bank something about your previous credit behavior: Have you paid off old loans and, above all, have you paid the installments regularly? Or were there any discrepancies or late payments?
The information provided by the bank also counteracts over-indebtedness of the borrower. If a bank sees during the loan processing that the borrower has difficulty paying its debts, the bank prevents overindebtedness with a loan cancellation. By getting information from credit check, the bank does not want to annoy its customers; it only wants to protect itself and the borrower from a financial risk.