When we apply for a loan, we can come across many concepts that we have dealt with so far – so we don’t always fully understand what they mean. Terms such as “scoring” (does it have something to do with sports results?) Or “initial credit decision” (why, if only the final decision counts anyway?) Introduce some confusion that we hope to sort out and explain. Let’s look especially at this last concept.
Why is the initial credit decision issued?
The main purpose of introducing the stage of issuing the initial credit decision is to save time – both for us and the bank. In the case of loans for larger amounts, each time we have to prepare and deliver large amounts of documents, which later employees and IT systems of banks must process. However, it happens that a very rough look at our applications for cash loans suggests that we have little chance of meeting the criteria expected by the bank in relation to its borrowers. In this case, we immediately receive information that the initial credit decision is negative, and our chances to get a loan are small, so there is no point in further processing our applications. Especially if our parameters given in the initial application do not improve significantly.
What data is used to issue the initial credit decision?
It depends on the bank – everyone has their own set of questions and fields to fill in the loan application, on the basis of which the decision is issued. The questions also vary depending on whether you are interested in cash loans or other types of loans. Regardless of the scope of the expected data, the completeness of the application is checked and a preliminary economic analysis is carried out. As part of it, we are checked in the databases of the Credit Information Bureau and others operating on a similar basis, and our estimated creditworthiness is also verified.
How often do the initial and final decisions differ?
It depends both on the bank where we applied for the loan and our individual situation. Some banks have a very solid approach to the preliminary analysis stage, thanks to which most of the aspects that could cause our application to be rejected at a later stage are already taken into account before the initial decision. Even banks such as ENG Bank and Sure Bank operate in this way.
We need cash loans – in which cases can the initial decision be changed?
After giving a preliminary opinion on the possibility of granting us a loan, the stage of detailed analysis of our application follows. Depending on the type of real estate being credited, as well as their value and the bank in which we plan to take a loan, our situation may be subject to further legal, technical and economic analysis. If during this work nothing analyst is concerned, we can expect a positive decision – this time final. It is often checked by a second analyst before the final decision is communicated to us. However, if the initial decision was positive and the documents were filled in truthfully – we can expect an equally positive final decision.