Its relations with financial institutions are always observed. Have you ever received a pre-approved credit proposal? So this is a sign that you have a good reputation with the company that made you the offer.
This is the pre-approved credit principle. Based on a profile analysis, the financial institution proposes a loan to you.
But is it worth it? That is the question of many people. When the offer is good, we always distrust.
In this text we will unravel the mysteries of pre-approved credit. Let’s also show you the best scenarios for accepting this offer.
If you have ever needed a loan, you will know how the process works. First you go to the bank to apply for the loan. The institution, in turn, will analyze its entire financial profile.
It does this in order to know what your guarantees are. It is not good for the company to take risks. That is why, the more collateral you present, the more chances you have of getting the loan. This shows that you will pay that amount.
Pre-approved credit is a type of loan in which part of the profile analysis process is performed in advance by the financial institution. Your payer history is used as the basis.
In other words, the bank checks if you meet your financial obligations regularly. If you pay in full the installments of purchases on the credit card or even if you do not walk around getting involved in many debts. These are examples of good financial conduct.
So when that balance is positive, the chances of the bank or the financial company offering a pre-approved credit are higher.
How your profile is rated
There are bodies that feed databases with information from individuals who have past due debts. This is the case of Serasa Experian and the Credit Protection Service (SPC).
When the individual is ” dirty name in the square ” is because their data (full name and CPF, at least) are in the files of one of these organs. Traders and financial institutions constantly consult these databases before offering or approving a loan to you.
What are the bad loan alternatives?
Moreover, in a connected world like today, there is an increasing chance that you will go through such an assessment without realizing it. Online shopping enabled companies collect good information part of your relationship with the market. These information can also be used as a basis for financial institutions to mount pre-approved credit proposals for their profile.
This is a way for banks to protect themselves. Every loan, as said before, represents a risk to the financier.
When a bank makes a pre-approved credit proposal it evaluates the good payors in advance. With that, in fact, the institution is trying to lower the risk of the loan. Most likely you will pay your debt on time if you have this recurring habit.
On the other hand, even the most disciplined person may need cash on hand in certain emergency situations. Sometimes she does not use the loan for fear of being rejected or of not being able to pay. Pre-approved credit is a way for the bank to say that there is money available in case you want to use it.
Main advantages of pre-approved credit and when to use
The great advantage of pre-approved mode is the lack of paperwork and the ease of having money in hand.
The way of hiring is almost automatic. It can be made directly into the bank’s system, be it online or ATM. And pre-approved credit can come not only in the form of a loan, but also as a credit card.
It is important to keep in mind that even after accepting the offer, you are subject to an analysis of the bank or financial agency. This assessment, however, serves more to confirm the data that has been obtained about you at some point in the past. Sometimes, if the information does not match, the bank does not authorize the loan and may withdraw the proposal for a while.
The best scenario for you to accept a pre-approved credit offer is when there is a debt to be paid off. Low bureaucracy is a determining factor in putting money quickly at your disposal.
If you have some good that you want to buy, it is also valid to accept the proposal. Before accepting, be sure to evaluate if the installments will fit within your budget.
Like all credit, you need to keep an eye on payment terms, interest and fees. All of these items vary from bank to bank and according to your profile.
One disadvantage of pre-approved credit is that this is a closed proposal. You will hardly be able to negotiate interest rates and installments with the bank. If you want more margin for negotiation, look for more traditional lending or financing options with a reputable financial institution.
Pre-approved is different from other automatic credits
Some people find that pre-approved credit is the same thing as overdraft. But they are not the same. Overdraft is a form of automatic credit that exists in most checking accounts. In this case, when the current account balance becomes negative, the customer automatically enters the overdraft.
The interest rate on pre-approved credit and overdraft are also very different. Since the overdraft is automatic, there is no profile analysis. Therefore, the risk of the bank default is high. So much so that in Brazil the overdraft interest is considered one of the largest in the world.
Pre-approved credit has fixed interest rates and is much lower. In some cases, it is advantageous to change the form of debt. For example, if you owe a high amount on overdraft, it may be worth the lower interest debt through a pre-approved credit.
Discipline is your biggest ally in accepting pre-approved credit. You are not required to accept the offer. Not even when she’s very tempting. By always maintaining a good relationship with the market and financial institutions, with current accounts, it is quite likely that you will receive other pre-approved credit proposals.