The inquiry to credit rating can be described as proof of creditworthiness, as can proof of sufficient income to repay the loan. Such is generally required if the loan is not covered by collateral.
Lending without proof of credit
A loan without proof of creditworthiness in the narrower sense can only be said if the lender neither obtains credit rating information nor checks the ability of the credit customer to properly repay the liability. The loan without any proof of creditworthiness generally requires the provision of collateral and is customary in the pawnshop. Insurance companies also offer their customers a credit without proof of creditworthiness by loaning an existing insurance contract.
Unsubsidized life insurance and private pension insurance are suitable for mortgage lending, whereas contracts are not suitable as collateral because this use leads to the recovery of allowances and tax benefits. Customers also perceive a new order for payment in installments from a mail order company as a credit without proof of creditworthiness, since the latter only requests proof of earnings in the case of large amounts and only makes a credit rating request once when placing the first order.
In fact, however, the merchant uses his customer’s previous payment behavior for an internal credit check. Once credit has been granted, the credit card’s credit limit can be used again at any time without further proof of creditworthiness.
The loan without credit rating
A credit rating-free loan is often advertised as a loan without proof of creditworthiness. In fact, however, the federal credit institution uses strict criteria to check the applicant’s creditworthiness against the income and security of the existing employment contract, taking into account only the earnings from the main job. Any existing negative entries with the credit rating do not actually affect the loan, since the bank cannot submit a credit rating request.
However, it limits the amount of the loan to USD 3500 to a maximum of USD 5000; larger amounts are only awarded through a credit broker. It is not possible to take out several loans from different banks because an inquiry is made. Comparable to credit rating, this collects data on loan agreements concluded.