What does a credit without credit bureau information mean?
If you would like to take out a loan, a lending bank asks your entries from credit bureau (Protection Association for General Loan Protection) to determine your ability to repay. Borrowers who are unable to provide positive credit bureau information for borrowing can still get a loan. It is a loan without credit bureau, in which the lender does not obtain credit bureau information from the potential customer. This distinguishes a loan without credit bureau from a normal installment or disposition loan, which cannot be obtained without a credit bureau. This type of loan, in which credit bureau data is not processed by the lender, is often a single financing option for certain customer groups.
However, since German banks are legally obliged to check the creditworthiness and creditworthiness of a borrower, including through information from credit bureau, credit bureau-free loans can usually be found in the offer of foreign credit agencies in Europe. Such credit brokers are often based in Switzerland, a credit bureaufree loan for German consumers is also known as a “Swiss loan”.
How can I use a credit bureau-free loan?
The credit bureau-free loans are mostly made available for free use – be it a long-awaited vacation trip or a new car. Loans without a credit bureau query are often taken out to reschedule old loans or to settle accounts. The loan without credit bureau is also a way to pay your due bills or to solve other acute financial problems. Several open requests, such as new kitchens or furniture, can be met with a credit bureau-free credit. Now you should prepare yourself thoroughly for a correct loan request.
credit bureau-free credit – how is the credit check carried out?
If you take out a loan from a foreign bank without a credit bureau query, you cannot avoid checking the creditworthiness. Although the negative files stored in the credit bureau are no longer relevant for a credit intermediary, a credit bureau-free loan is still secured by different check criteria before being granted. Most often, a loan broker asks for a minimum income, permanent employment contract, or even health information from the borrower. Decision support for lending also includes other collateral, such as real estate assets.
Who takes out a loan without credit bureau?
Whether you will receive a loan in a bank depends on the so-called credit bureau score, which determines your ability to repay or willingness to pay. With numbers from 1 to 100, the score estimates your creditworthiness, with 100 being the best prospect for a borrower. Consumers who demonstrate a low score can access a loan without a credit bureau query.
Those who opt for a loan without credit bureau information usually have certain requirements that make it impossible to grant a normal installment loan to German banks:
- you have a negative entry in the credit bureau
- the banks do not want to be given access to their credit bureau files
- The requested loan should not be saved in the credit bureau
Therefore, a credit bureau-free loan can be an optimal financing solution for living conditions where several documents cannot be submitted or certain notes should not appear in the credit bureau. It also makes sense to compare numerous loan offers before borrowing to select a reliable provider with the right terms.
Requirements for credit without credit bureau
In general, it is important for all loans that are granted without credit bureau that the potential borrower has sufficient creditworthiness. In other words, the applicant should provide regular income that proves that the customer is able to repay the loan taken out on time. Other expenses for rent, car and loans that are already in progress should also be included and leave enough scope for the payment of a loan. The following requirements must be met for a credit bureau-free loan:
- the borrower should be at least 18 years old
- the borrower should provide proof of residence in Germany
- stable income (pensions are also included)
- the borrower should have a permanent employment contract
- the monthly rate should be adjusted to the household budget
- Collateral for the self-employed (e.g. the assignment of a life insurance policy or the registration of a land charge)
Refusal of funding
If your income is not sufficient for the desired loan amount or you are in a temporary employment relationship, it is unfortunately hardly possible to grant a loan. Students and employees during the probationary period also belong to the customer group that is badly given a loan. If the conditions for borrowing cannot be met without credit bureau, a co-applicant can help. He can provide some security with his income so that a bank can still approve a loan.
Request credit bureau self-disclosure
So that you know which entries are stored in your credit bureau data and whether you need a credit bureau-free loan or can take out a normal installment loan, you first apply for credit bureau self-disclosure. To do this, contact credit bureau directly, which offers every citizen a free option on their website to inquire about their credit bureau files. Every German citizen has been able to request credit bureau self-disclosure once a year free of charge since 01.04.2010. It was established by law to give every consumer access to his credit bureau entries so that you can quickly find out which type of loan should then be applied for.
If you have opted for a loan without credit bureau, the next step is to compare a wide range of loan offers, which there is a lot in the area of loans without credit bureau information. It is often difficult for a loan seeker to choose a suitable and reliable credit broker from among numerous offers. It is advisable to contact a loan expert who can do a thorough comparison of the offers for you. This way you can find the best conditions and secure yourself against dubious providers. In a serious credit comparison, there are usually no costs or fees.
Prepare documents for application
By submitting the relevant documents to the respective credit broker, you can help them make a credit decision as quickly as possible. The documents submitted can also prove the information given in the credit request, in particular the amount of income and the account balance, which convey the applicant’s income-expenditure situation. For some customers, information about rental contracts is also required for the credit check. In general, the following documents are submitted for the loan request without credit bureau:
- Salary certificates (usually for the past 3 months)
- Account statements for the last 4 weeks (original)
- Freelancers and the self-employed submit business evaluations (BWA) or income tax assessments for the past 3 years
- Copy of identity card or passport
The lending institutions generally standardize their work processes, but for some banks they are individual and require additional documents. If the credit intermediary needs further information, you will be contacted immediately.
Submit credit request online
When you have all the necessary documents ready, you next select the cheapest loan offer and then make the corresponding loan request. The application is then made either to the lender directly on his website or via specialized credit intermediaries who offer their service on their own website. There you will find a form that has to be filled in online.
After the application has been completed, it must be sent to the lender online or by post. The latter then checks whether all documents are complete and whether the creditworthiness score or ability to repay are sufficient for lending. In any case, you will receive a positive or a negative feedback.
If you have received a credit approval, you should carefully review the offer and conditions before you sign a credit contract and send it back to the credit intermediary.
How do I get the money?
After the final check, the payment is made by crediting the loan amount to your specified checking account. By agreement, the loan can also be paid out by postal order or in cash.
It should be noted that the entire processing and preparation of offers is generally free of charge for most credit intermediaries, although processing fees are charged for some credit intermediaries.
Interest rate for loans without credit bureau query
For those looking for a loan that have a negative credit bureau entry, a credit bureau-free loan, also known as a “Swiss loan”, is often an optimal financing option if they cannot prove positive credit bureau data at a bank.
However, since credit bureau does not check the creditworthiness or creditworthiness of the borrower before granting the loan, the lenders should protect themselves against default risk. Therefore, there are certain conditions that affect not only the loan decision, but also the interest rate and the term of the loan. If the borrower fulfills all requirements (such as minimum income, permanent employment contract and place of residence in Germany), he can, according to the internal guidelines for lending, expect a cheap offer. The interest rate for loans without a credit bureau query can vary from approx. 5% to approx. 15% (but also more).
Most providers who grant loans without credit bureau usually have a certain number of loan amounts (on average up to approx. $ 5,000) in combination with corresponding terms (on average 12-120 months). The loan amount depends on the applicant’s income-expenditure situation and often serves as a decision-making criterion when determining the contractual terms.
Repayment of the “Swiss loan”
After you have fulfilled all the requirements and received a loan without credit bureau, the loan must now be repaid on time. Payment is made at the regular monthly installments, the amount of which was agreed when the contract was concluded. In order to repay the credit bureau-free loan in full, you pay constant monthly installments that result from the repayment of the loan and from the fixed interest.