Do you know how credit analysis is done on a payday loan This is a verification related to the request for loans, financing and other financial products from banks, finance companies, platforms, among other institutions.
But, what would a credit analysis be? What data about you will you need to report and how does it affect the analysis? Solve these and more doubts, we explain here the main information on the subject. Keep reading this article to learn more about the topic and ensure that you are prepared when looking for a loan.
What is credit analysis?
When requesting credit, financial institutions analyze their ability to pay for the contracted service and the risk of default.
In short, the loan or financing will only be assigned or denied after this analysis, avoiding losses and risks to the company. At that time, personal information will be analyzed, as well as the user’s credit profile and financial capacity.
Why do I need to apply for credit?
There are many reasons for people to apply for credit. Some of them are:
Pay off debts
The search for loans to settle debts is one of these situations, since they usually present good conditions in terms of rates and terms, in addition to being able to negotiate to guarantee the best possible deal for each case. An example is to opt for a loan instead of installment of the credit card or to make a debt renegotiation.
Finance an asset
Another reason that makes people go through credit analysis is the search for financing an asset, such as a home or a car.
There are also those who seek personal credit when investing in a business, for example. If the application is made in accordance with the investor’s profile and is profitable, she may soon pay for the loan herself.
What is analyzed to grant a loan?
Knowing what it is and what are the main reasons that lead someone to apply for credit, it is time to find out the list that is usually followed by institutions when analyzing the profile of any applicant. It includes the analysis of:
- registration data;
- income commitment;
- name restrictions;
- credit profile
This being the complete list of information requested for analysis, it is possible to divide it into two large groups.
The personal information relates to the credit applicant’s registration data, that is, those that he himself fills in when contacting the institution. Then, the documentation is used to prove the veracity of the data and proceed to the financial analysis of the process.
Proving the veracity of the applicant’s data, his credit profile is analyzed, that is, the history of credit use is redeemed and analyzed, as well as any restrictions or active debts. The score is also used for this.
Then, if the applicant’s history and profile are approved, proof of income is requested, indicating that it will be possible to pay the installments of the debt that will be acquired.
If approved definitively, the credit will be released and must be paid according to terms, interest, other fees and installments defined between the applicant and the financial institution.
In short, credit analysis is an attitude taken by financial institutions to assess the financial profile of applicants.