Nowadays, more and more people are applying for loans. They are not always in difficult life circumstances: some of them want to start their own business, buy some property for a good price or even travel to exotic countries with their families. There may be plenty of reasons why banks refuse them in issuing a loan, but this isn’t a reason for upsets. MFIs are more loyal to age, social status, income, and credit history than banking institutions. Look at the list of six common reasons to use the services of the MFI.
1) Bad Credit History
This is the most common reason why banks refuse loans. Credit history is detailed information about the borrower, which reflects his payment discipline. This data is transmitted by banks to special institutions that accumulate and store it. Before giving a loan, the bank evaluates the client’s reliability and solvency. If a scoring system blocks customers with a bad credit history, they can always apply to MFIs. In 90% of cases, a loan will be approved.
Each bank has its own rules in this regard. Some institutions lend money to 18 y. o. clients. Others are refusing clients under 21 y. o. and more. The same applies to the maximum age. In some banks, this is 60 y. o., in others — 65 or even 70 y. o. If the client is not suitable for the age, banks will refuse him/her. In such cases, people can apply for an online loan at microfinance companies.
3) Lack of Income Certificate
Many banks require a certificate of income from their clients. However, not everyone has it. Today, a lot of people work either remotely or as freelancers. Some banks will refuse credits to such customers. As for MFIs, they are more likely to consider a client’s solvency than require any certificates.
4) Errors in the Questionnaire
All banks will carefully check everything you told about yourself in the questionnaire. Any mistake or inaccuracy may lead to the refusal. For example, if a client makes a mistake in his telephone number, ID, place of work, a scoring system may consider it as an attempt to provide false data. Anyway, they still can have a second chance at MFIs.
5) Criminal Records
A criminal record is another important excuse to refuse a loan. The bank doesn’t care about the circumstances — such a client won’t be trusted. Online lenders are more loyal to their borrowers. So, MFIs may be a good solution.
6) Low Income
Keep in mind — the salary should be 2 times bigger than the amount of the monthly loan payment. If the monthly earnings cannot cover the cost of living and the upcoming amount of the monthly payment, then with a high probability a client will be refused. Such circumstances may be eliminated by MFIs if a person indicates his\her additional income.
As you see, MFIs can help you fix the financial situation in case of an emergency. So, don’t hesitate to use their services.