Applying for credit is sometimes seen as a miracle solution to a difficult life situation. That said, financial organizations such as banks have every right to refuse the request. There are many reasons for a loan refusal, but in a country where credit reigns supreme, the consequences can be penalizing. Focus on the negative repercussions of a loan refusal.
What are the main consequences of refused credit?
The contestation of a credit application causes real prejudice to the borrower, who has to wait a minimum of 6 months before being able to submit a new application. The length of time varies according to the number and factors of the credit refusal outlined by the banks and financial institutions.
The major influence of numbers
A credit refusal and registration with the ZEK that does not compromise your creditworthiness, as long as the accumulation does not exceed a third posting. When this quota is reached, a new loan application will be automatically refused.
The first mistake that can be fatal to a borrower's image is to submit applications to multiple institutions simultaneously. Assuming that all applications are rejected because certain basic conditions are not met in accordance with LCC instructions, the cumulative total will exceed the limit. New loan applications will be tricky and complicated in the future.
This situation reflects the need to use the services of a broker to submit credit applications in an orderly and considered fashion. It will take the time to select the financial institutions that will give your profile the best chance of granting you the loan, and will prepare your credit application as well as possible. In the event of rejection, ZEK will only issue a single notification, not several, giving you the opportunity to prepare your application differently.
Is it a good idea to apply for credit with a lawsuit?
There's no point in trying to apply for a new credit file when you've been turned down by a financial institution. Clearly, the latter and all lending institutions are obliged to reject the request of a person who already has more than one lawsuit in their extract. This obligation is limited by the Swiss Consumer Credit Act or LCC.
This new request will also tarnish your image with certain establishments. They will refuse your application, but they will record your data in their personal databases. So, even if you've taken the necessary steps to resolve your situation and submit another application, it's highly likely that the entity will decline the loan. This is because of your internally recorded history.
At the end of the day, applying for credit with lawsuits is a bad idea. Indeed, access to a loan will be particularly difficult, if not impossible, in the future. Here too, the best solution is to call on the services of Lica who will know how to resolve the situation. Then you can submit a new application.
How do banks and financial institutions know about your situation?
In Switzerland, the creditworthiness of an individual taking out a loan is particularly important. As mentioned above, the ZEK is one such registry. It is a loan information center that archives credit information on individual borrowers. Creditworthiness data, whether positive or negative, is stored in a number of different registers.
ZEK collects the following information about you:
- All your current and/or previously contracted obligations;
- Whether or not you have fulfilled your obligations;
- The directory of your credit application, with details of whether or not it has been approved.
If your credit application has been submitted to a bank, the credit refusal is automatically registered with ZEK. This lasts for 6 months, and a notification is linked to the registration.
Banks spontaneously consult this organization's directory before approving a loan. They will also have access to your lawsuit history, including any you have already resolved. ZEK uses codes to indicate the reason for credit rejection. Common reasons for rejection include lack of budget or too great a commitment to take out a loan.
However, using the services of a broker to take out a loan is more than advisable. Your broker will refrain from contacting a bank to submit your application if he or she sees that your request is likely to be turned down. In this case, you'll receive advance notice and avoid an unnecessary entry in the ZEK's central file.
Is it possible to settle a notification of refused credit filed by a financial institution?
It's important to look at the positive side of this difficult and problematic situation. First of all, borrowers can consult their ZEK extract free of charge. This option gives you the opportunity to check the points accumulated and the reasons given by the bank in the form of a code. The good news is that you can rectify the situation, and rid your account of negative credit data, so that all the lights turn green to facilitate your future credit applications. To resolve this situation, the support of a professional is also highly recommended! His or her in-depth knowledge of financial matters will be invaluable, and he or she will be able to advise you on how to deal with each code in your ZEK register extract.
What codes are commonly used in ZEK archives?
The most frequently used codes during registration are :
- Code 00: repayment obligation not honoured on time ;
- Codes 01 and 02: a new credit application is launched and the repayment obligation is met;
- Code 03: the current loan or lease is in monthly arrears. Registration is valid for 5 years;
- Code 04: the current loan or lease is grossly overdue. The party concerned has applied for a reduction. The registration is still valid for 5 years;
- Code 05: the borrower has defaulted and the bank has lost a significant amount of money. Registration is valid for 5 years.
Lica's solutions in the event of a credit refusal
Carry out your loan application with Lica guarantees you a high acceptance rate. Better than applying directly to a financial institution. What's more, at Lica you'll benefit from the best rates on the market and a cashback of up to $5,000 on top of your financing! So why pay more elsewhere?
If you've been turned down for a loan, don't panic! Don't make any further requests, and submit your file to Lica. Our specialists will assist you until you obtain your financing, and will propose advantageous solutions to resolve the situation.