What criteria banks use to evaluate customers

What is borrower creditworthiness

Creditworthiness is the amount of credit load that a borrower can take on, followed by the proper fulfillment of obligations under the agreement. In other words, it is a customer's ability to take out a loan from a bank and repay it without violating the terms of the agreement with the credit institution.

A synonym for the term "creditworthiness" is the borrower's solvency: the proportionality of their current financial capabilities to their credit obligations. The target client for a bank is a creditworthy one who demonstrates that the lender can trust them when concluding a loan agreement.

How banks check a borrower before issuing a loan

There is no single borrower assessment scheme for all banks. In practice, situations often arise where one bank denies a client a loan, while another approves the application on suitable terms. At the same time, there is a system of criteria used by banks. These include:

• Borrower's age — banks are more interested in cooperating with middle-aged clients.
• Financial standing — the main component of creditworthiness.
• Employment — total work experience and tenure at the last place of employment.
• Current debt load — the volume of outstanding credit obligations at the time of application.
• Credit history — the borrower's overall credit score (rating).
• History of the bank's cooperation with the client — previously issued and repaid loans, active credit cards, placed deposits, and participation in a payroll project.

Additional evaluation signs are recognized as: availability of documents, region of permanent residence, and property owned by the borrower. After analyzing these and some additional parameters, the bank makes a final decision on the application.

Borrower's age

Borrower's age is one of the main indicators taken into account by banks in the first place. Current Russian legislation prohibits representatives of the financial sector from lending to underage citizens. For this reason, the minimum age of a borrower is 18 years.

The description of a credit program may also feature a high age threshold of 21 years or older. This is due to the fact that at 18 a citizen's financial position is not yet established, meaning such a client represents risks for the bank.

As for the upper age limit, not everything is straightforward here either. Some banks set the maximum at 65 years, while others set it higher or lower. An elderly borrower, despite their creditworthiness, is of less interest to the bank than a middle-aged client aged 40-55.

Borrower's financial standing

The main criterion taken into account by the lending institution in every case. A borrower with a stable income is creditworthy by default. Income is confirmed in two forms:

2-NDFL certificate — a statement of the client's official income, which can be obtained from the employer or the tax authority at the place of registration.
Bank-format certificate — a document containing all of the client's income, filled out and certified by the employer.

By confirming their income with documents, the borrower not only increases their chances of getting a loan, but can also count on more favorable terms. Accordingly, creditworthiness (solvency) is proven by the client themselves.

Employment

Along with a steady income, the client's employment is used. Here, the bank takes into account not only the borrower's official earnings, but also their tenure at their current job.

This approach is explained quite simply: the longer a borrower works for an organization, the lower the probability of their potential dismissal. Job loss is equated to a sharp decrease in creditworthiness, which is unacceptable for a lender.

From the standpoint of employment: the ideal borrower is an officially employed citizen of the Russian Federation who has worked in the organization from 3 months to half a year. At the same time, the total work experience is 3-5 years.

Client's current debt load

A factor that can significantly reduce the chances of getting a loan. The fact is that banks can see loans taken out in other organizations. This is done by requesting the borrower's credit history. Regarding active obligations, the borrower's history shows:

• Consumer loans, auto loans, mortgages.
• Credit cards.
• Loans from microfinance organizations.
• Suretyship.

The bank will also see what kind of obligations the potential client acts as a co-borrower for. The more active agreements there are, the higher the debt load.

Borrower's credit history

Another major factor that the lender pays attention to in every case. Potential clients should remember the rule: there are no loans without a credit history check.

Consideration of a loan application for any amount is always accompanied by a check of the borrower's history. The borrower gives consent to the processing of personal data when filling out the loan application form.

A low scoring score indicates the client's unreliability. A special program shows that cooperation with such a client carries big risks for the bank, which is unacceptable for any lender. And vice versa: a high credit rating guarantees the client a positive decision from the bank.

History of cooperation between the bank and the client

Former or current bank clients are one of the categories of borrowers who have a better chance of getting a loan than other citizens. Such clients are divided into the following subcategories:

• Credit borrowers who have repaid loans without payment delays.
• Current or former credit card holders.
• Current or former depositors.
• Participants in a payroll project — employees of companies and organizations served by the bank.

Если потенциальный заемщик относится к этим категориям, банк, с большей долей вероятности примет положительное решение по заявке на кредит. Это объясняется тем, что кредитная организация располагает достаточными сведениями о заемщике, платежеспособность которого не вызывает сомнений.

Additional criteria by which a bank evaluates a customer

В зависимости от наименования кредитной программы, банк использует некоторые дополнительные параметры оценки клиента. В их числе:

• Пакет документов, которые клиент собирает для подачи заявки.
• Место постоянного проживания — клиент имеет постоянную регистрацию в регионе присутствия банка.
• Наличие в собственности ликвидного имущества — по залоговым кредитным программам.

Здесь следует учитывать некоторые исключения из правил. К примеру, если речь идет о кредите под залог, то банк, в качестве гарантии, получает права на взыскание залога — имущества, находящееся в собственности заемщика. По этой причине остальные критерии, в виде кредитной истории, трудовой деятельности и прочие, отходят на второй план.