Instead of evaluating multiple credit scores and building a detailed borrower profile, banks and lending bodies study the credit score from one or a max two sources. Basing on this incomplete data, they reject second look loan applicants.
Second look loans are a boon to small and medium-sized businesses that have been declined financing. The businesses of these corporations are subjected to a ‘second look’ when they make a request for financial aid to the lending company or bank. Normally the lending body carries out a detailed review upon receipt of the loan request. Such a detailed examination is actually a plea for banks to reject the application. This write-up will discuss all the major reasons why a second look loan might get rejected. Following are a few points describing the same:
Credit scores from one or at the max two agencies are considered to be the main qualifying criteria for second look loans. If an applicant has low credit scores, the bank or lending body does not even evaluate the application properly and ultimately rejects it baselessly.
The principle of scrutinizing multiple credit scores is unknown to most banks and lending bodies today which is why they are losing out on their customer headcount. Moreover, they do not make an attempt to create a comprehensive and accurate profile of the borrower’s creditworthiness. So the customer faces rejections over and over from almost all the banks that he or she approaches.
Normally small and medium-sized business houses are the most impacted bodies during recessions or global economic crunches. Such crunched situations affect the financial needs of business houses that are already in debt and are in the process of clearing the same. So when such a business house approaches another lending band for financial aid, their application gets rejected.
When a customer has too many credit card bills to clear and less money in the bank to cover up these bills, he or she approaches a lending body like a bank or an authorized lender. But the problem is that many such lending organizations function in line with stringent rules and regulations. These rules are very inflexible and are actually instrumental in the rejection of the second look application form. This is the reason why ewer people are able to buy on credit these days which is actually a threat to the entire credit system.
Prime lenders who genuinely want to help out these deserving customers with a financial aid are held back by irrational strict limitations that are probably laid out by the organization eons ago. These outdated limitations hamper the current finances of society and ultimately affect the deserving customer whose loan application gets rejected.
Due to the global economic slowdown, borrowers who were once upon a time able to straightforwardly meet the criteria for credit are these days bumping into rejections from lenders greater than before.
All borrowers who are victims of this flawed process face similar rejections from every one of the places they apply to. Hence low credit scores obtained from one or two sources, incomplete borrower creditworthiness profile and faulty regulations of financial bodies lead to second look loan rejections.