Your credit request has been denied. What are the possible reasons, how do you know if you can or should make another request, or what are the possible alternatives? Our explanations.
Reasons for refusal
There are many possibilities that can lead to a credit refusal. These are generally linked either to the plaintiff’s situation or to his background. More specifically, the main reasons for rejecting a request are:
- Insufficient budget: the law (LCD) clearly stipulates that the granting of a credit is prohibited if it risks causing over-indebtedness of the consumer. Financial institutions offering loans therefore have an obligation to control the canvasser’s budget. If its finances do not allow it to generate a budget surplus sufficient to repay, the loan will be rejected.
- Negative history: banks check the history of their customers. In particular, the credit history of each applicant is recorded in a unified central office in Switzerland: the ZEK. Before granting a credit, a verification will therefore be carried out with this central. A negative entry in the ZEK will generally lead to a rejection of the request.
- Prosecutions: people who are in financial difficulty cannot legally obtain credit. In the event of legal proceedings, it is therefore impossible to obtain a loan from a financial institution.
- Work permit: foreigners working in Switzerland must have been working with the same employer for a certain time: 3 months for C permits, 6 months for B permits, and 3 to 4 years for G (cross-border) permits. People with an L license generally cannot get a loan.
- Income: to obtain a credit, it is therefore necessary to be employed in Switzerland for at least 3 months, or self-employed on your own account for at least 2 years.
Wait at least 3 to 6 months
As indicated above, each request is normally registered with the ZEK. Thus, a person making numerous loan requests from different companies may find themselves blocked very quickly. Best practice therefore remains to limit the number of requests made at the same time. In the event of refusal, the chances of obtaining credit from another agency are almost zero, and repeating a request may even penalize the file. For this reason, it is better to wait at least 3 months, even 6 months before making another request!
The best remains, for the next request, to be able to justify an improvement in his file: lower expenses (insurance, rent), higher income (salary, wages of the spouse), or simply improvement of the background (credit currently paid on a regular basis). In case of doubt, it is also useful to contact a credit counselor such as for example with Astro Finance. A specialist will then allow you to explain your situation and advise you accordingly.
Alternatives to credit
If it is impossible to obtain a loan, and if this was intended to solve a financial problem, you should know that there are alternatives. Indeed, in case of financial difficulties, credit is rarely the solution, and requests will rarely be accepted by serious and law-abiding institutions.
The alternative is usually to go through a debt relief company. They thus offer assistance in establishing a budget and the possibility of negotiating your debts for you to obtain a reduction in interest and possibilities of additional payment periods, for example. A first free interview is generally possible in order to have a better overview of the services offered and the possibilities offered.