It is widely believed that MFOs give money to everyone in a row: people with an asocial lifestyle, with an extremely low income etc. In fact, it is not such a case. Each micro financing organization has a certain method of checking the client’s solvency and calculating the maximum possible amount of a payday loan.
To verify the borrower, certain evaluation criteria are used. Objective data include information that is indicated in the documents provided by the borrower and official record from the credit bureau. Subjective data is the impression of the financial service employee on customer-to-be based on the way of communication, voice etc.
There Are Two Ways To Verify a Potential Borrower:
- Manual method – an assessment of the information provided by the borrower. The most important for MFI managers are citizenship, the address of permanent or temporary registration, the size of monthly income, credit history and other info that is necessary for a specific MFO. This option is most often found in organizations that have offices.
- The automatic method is used by companies that offer round-the-clock payday loans online. There is a special algorithm which helps to do this procedure.
Many MFIs use both tools and make two decisions on the application, namely preliminary and final. Usually, the first option is made by a special scoring program (assessment of the borrower’s creditworthiness), and the final decision is based on MFI’s employee opinion. It is often the case that after prior approval, a refusal is received or it is proposed to take a smaller loan.
Does the MFI have a portrait of an “average fraudster”?
Is there any coincidence between bank fraud and similar cases with online financial service? Usually fraudsters immediately refuse to repay loans. Sometimes they make the first or even the second repayments, but then they don’t pay at all and do not contact the bank.
Bad borrowers are that individuals who repay loans properly within six months, and then allow a delay of more than three months, which is usually associated with loss of work. Such borrowers cannot be called fraudsters, because they temporarily cease to deposit money into the bank due to the prevailing circumstances. A bad borrower for an MFI is a person who has allowed a delay of more than 30 days with a weekly loan repayment.
As you see, dealing with online vendors is a very beneficial solution in difficult life situation when the bank has turned your down.