The conditions for accepting a loan are not always the same. They naturally differ from one organism to another. But the criteria for accepting a loan also depend very much on the nature of the loan. Home loan, car loan, personal loan, loan repurchase: how to avoid a refused loan and what are the conditions for accepting a loan?
What are the conditions for accepting a loan?
The principle of the credit reporting system is always the same. Organizations and banks use credit acceptance criteria to try to assess the risk taken. Their goal is to avoid at all costs being faced with a borrower unable to repay. To assess the risk of a credit request, they refer to credit requests already granted.
If the credit request looks like a file accepted in the past and currently unpaid, chances are that the request will not pass. In this case, the credit is refused. In most organizations, a first decision in principle is given immediately, it is the principle of online credit.
The resemblance from one file to another is done by the credit score. To be accepted, a file must both respect the conditions for accepting credit but also obtain a good score. To calculate the score (equivalent to the “chances” of looking like “good files”), credit organizations allocate points based on the answers given to the credit questionnaire. For example, for the type of housing, an owner will get a lot of points while someone housed by his family will have a lot less. The score will be the accumulation of all points. You have to reach a minimum threshold to get an agreement. Be careful to fill in your exact information on the credit questionnaire, otherwise you risk exposing yourself to an accepted credit then refused the final study.
Acceptance conditions and reasons for a refused credit
The most commonly used conditions for obtaining credit are:
- Bank registration / prohibition : this criterion for accepting a loan is unacceptable. The request for credit from a person on file (BDF or FICP) has no chance of passing.
- Type of job : If one of the two borrowers is not in CDI or in liberal or retired profession, it will be very complicated to obtain an agreement. It is generally quite rare to find yourself faced with a credit refused on a permanent contract by all lenders. A solution is often possible.
- Debt ratio: the acceptable debt ratio depends on the type of credit requested and the overall situation of the borrower. It usually doesn’t have to be more than 30% or 40% to get a deal.
- Remainder of living per person : this is what remains per month per person at home once the accommodation costs have been paid
- Credit score : this is the least comprehensible criterion for accepting a credit (because composite as we have explained) but probably the one that generates the most refusals.
Important: organizations almost never communicate about the reasons for a credit refusal. Proposing a credit response refused without reason is completely legal. As the CNIL reminds us, there is no right to credit in France. And as generally the reason for the loan refusal is the score, the establishments would not even be able to communicate precisely on the criterion of loan refusal.
Conditions for accepting consumer credit
The criteria for accepting a car loan do not differ that much from a personal loan or a work loan. Even if we could imagine that there is less risk of non-payment on the part of someone who buys a car than someone who needs money without wanting to justify its use, this is not the approach of credit agencies. They preferred to offer slightly cheaper rates on new or work auto loans than on personal loans. Overall, we will have the same acceptance conditions on consumer credit.
What changes is that the credit scores are not the same and the limit for acceptable credit scores is not the same from one organization to another. To put it simply, we could imagine that some organizations accept more than others but charge a little more for their credits. In this way, they can control their margin and choose who they are addressing. The conditions for accepting a loan are therefore not the same from one organization to another.
Simplify the credit application
To explain in a caricature the use of the credit acceptance criterion “score”, one can imagine that a credit organization specializes in credit for “the rich”. This organization would offer very low credit rates but would only reserve a favorable credit decision for the wealthy.
Conversely, another organization could specialize in credit for “the poor”. He would accept the worst scores but would charge very expensive rates. These two organizations would each have their specific market but could very well have a comparable level of margin.
To get around this problem and everyone can get the best rate suited to their file, we have developed an exclusive questionnaire. Not only does it get the ranking of the best rates, but that’s not all. Each file receives in real time a response in principle from the cheapest organization adapted to the request. If the file does not meet the conditions for accepting the cheapest credit, it is possible to interrogate with a single click the organization classified 2nd and that classified 3rd if necessary.
Main conditions for acceptance of consumer credit
We only give this information for information. Only the detailed evaluation of a complete file provides an objective opinion.
- Don’t be on file
- Maximum debt ratio of 50% (rent charge or property loan / (sums of income – pensions)
- Type of job: at least one CDI (punctually CDD or Interim can pass for a small credit)
- Rest to live per person minimum of 180 $
The score will be different between a repayable loan and revolving credit. This credit acceptance criterion will be more flexible for revolving credit, which requires fewer proofs of credit on average. The revolving credit corresponds to a request of 4000 USD or less on our comparator.
Conditions for accepting a mortgage
We will find the same principle of acceptance on the mortgage and on consumer credit. What will change mainly in the conditions of acceptance of the credit, in addition to the other criteria already seen, is the type of property, the duration of repayment, the initial contribution and the insurance of the credit.
The type of property is not a condition for accepting mortgage as such, but it directly influences the debt ratio. Indeed, in the context of a rental investment, the total estimated rents will not necessarily be taken into account 100% in income. The new credit will be taken into account in debts.
It is the same for the duration of the credit. As much the influence of this acceptance criterion was slight in consumer credit as much to subscribe over a long period for a mortgage allows to lower the monthly payment and potentially to make acceptable the debt ratio and the rest to live.
Getting no-loan credit for consumer loans is no problem. The same cannot be said for home loans. Indeed, for some banks, this can be a must. Without being a condition for accepting outright credit, having a contribution can be a condition for obtaining a promo rate, for example, this was the case for Astroa credit.
Last significant difference between mortgage and consumption: insurance. Indeed, credit insurance is optional in consumer credit while it is compulsory in mortgage. Without one being a condition for accepting the loan directly, insurance can be refused or be subject to an unacceptable price…
Criteria for accepting a loan buy-back
The repurchase of credit consists in gathering all the credits in progress, including mortgage, in only one and new loan whose duration will be sufficiently lengthened to obtain an acceptable monthly payment. It is the credit that allows you to rebalance a budget when you have too many credits to repay each month.
Since the duration will be extended, the repurchase of credit generally costs more in the end (it is not a renegotiation of credit rate). But it is often the only solution to restore financial balance and avoid over-indebtedness.
The conditions for accepting a loan buy-back are generally :
- Debt ratio less than 50% after the takeover
- At least one CDI
- No filing (FICP or FCC)
- At least 2 credits to redeem
The study of a credit repurchase will be very thorough. The conditions for accepting this credit are the most numerous.