The Impact of Loan Inquiries on credit bureau Scoring – Not only problematic payment behavior can adversely affect the score value of credit bureau. Also, a higher frequency of loan requests from interested consumers worsens the value. It is better to get relevant information about a condition query. It has no negative impact on the score value.
Definition credit bureau scoring
credit bureau scoring is a complex process in which the individual creditworthiness of a customer is determined.
The credit rating provides information about the creditworthiness and is determined from the data available from the credit bureau (protection association for general credit protection). The economic information agency in the legal form of a public limited company gives authorized parties various information on the business conduct of a person. credit bureau sees itself as a service provider and wants to protect its customers against potential credit risk on the one hand and consumers on the other hand from possible over-indebtedness.
Borrowers must give their consent before the credit bureau grants information to lenders. As a rule, without the information on a sufficient creditworthiness no loan is granted. The required score value is a corresponding assessment based on statistical data. The associated characteristics can be positive and negative in nature and are incorporated into the credit bureau scoring.
Positive and negative credit bureau characteristics
Both types of characteristics give conclusions about the creditworthiness of a consumer.
Basically, information about most people is stored in the credit bureau. As a whole, nearly 90 percent of all relevant data is positive. For example, they provide information about the reliability of payments, the number of existing credit cards and bank accounts and the associated positive payment behavior.
Only in the case of abnormalities, such as a late payment or a payment default, negative entries occur that adversely affect the scoring value at credit bureau. For example, if there is an enforcement order or a loan has been terminated by the bank, these negative features will appear in the score value.
Low values mean that lenders are more likely to default on payments. The commitment to a desired installment or a loan can be made more difficult. Even with a high level of credit inquiries, the credit bureau Score may deteriorate. If, however, the so-called condition request is made, this has no negative impact on the value.
The loan request
It is often thought that the credit request alone could lead to grading.
This is clearly not the case. However, it depends on the way the information is collected. Consumers who submit inquiries to several lenders and who already provide their personal data at the time of the mere expression of interest must reckon on storage at credit bureau. Such information is of interest to a lender because it is reasonable to assume that frequent requests without borrowing will indicate a negative decision.
Whether this is actually the case, a bank does not see, it only sees the repeated requests or the corresponding value in the scoring. Anyone who has already made frequent specific inquiries with banks, stating the personal details, should inquire at the credit bureau itself whether these requests have been saved. Every citizen has the right to have a free access to the data once a year. For this purpose, a form must be filled, which is available for download on the page of the credit agency.
Condition rather than loan request
Nevertheless, consumers do not have to give up on several comparative credit inquiries.
In order to obtain an offer, it is usually sufficient to enter the relevant information in an anonymous form into a loan calculator and to hear the offer from the lender. This request is a condition request. Its purpose is to give a consumer, without further obligations, an overview of the various options and terms of specific loan options.
The request for a condition is therefore considered to be a trade-neutral expression of interest, which has no influence on the personal credit bureau value in contrast to the actual request for credit. This regulation also applies in the case of a personal meeting with a local bank. However, the customer should point out that initially he is only interested in terms and conditions, not a loan.