The Credit Bureau entry is colloquially only negative characteristics registered there, although most of the data of the credit protection association refer to properly serviced loans as well as existing credit lines and telecommunication contracts.
A guarantor is liable for the repayment of a loan as soon as the actual loan customer cannot make it. Guarantees are usually agreed jointly and severally. This means that the bank can turn to the guarantor after an unsuccessful dunning procedure and does not first have to have the customer unsuccessfully attached. The amount of the guarantee is usually limited to a specific loan including the associated interest.
Who can vouch?
A borrower can in principle suggest any person as a guarantor. In its own interest, however, the bank does not accept every proposal for a loan despite Credit Bureau entry with guarantors, since the legislator places specific requirements on the effectiveness of a guarantee by private individuals. These may not be financially underwritten with the guarantee given, at the same time neither their inexperience nor a moral emergency situation may be exploited.
This does not necessarily exclude the guarantee of close family members, but the bank must ensure that they are financially resilient and do not act out of a perceived predicament. A consequence of the legal provisions is that credit institutions, despite Credit Bureau entry with guarantors, place higher demands on the economic performance of the guarantor than on the actual borrower.
The guarantor must not have forfeited a negative entry at Credit Bureau, and at the same time his income must allow the guarantee obligation to be satisfied. If these requirements are met, the application for a loan despite the Credit Bureau entry with guarantors has good chances of approval, so that the guarantee is a sensible option for borrowing despite an existing negative entry.
What needs to be considered with a guarantee?
When selecting the bank, borrowers make sure that the selected bank actually offers a loan with a guarantor despite Credit Bureau entry. Some direct banks generally do not grant loans with guarantees due to the workload associated with the guarantee declaration. At other banks, loan applicants with poor credit ratings or with negative characteristics in their Credit Bureau information themselves suggest providing a surety.
In some cases, a bank initially rejects a loan application and advises the applicant on its own that it can obtain the desired loan when it provides a guarantor. If a loan is entered into with a guarantor despite Credit Bureau entry, the bank concludes a loan agreement with the borrower and a guarantee agreement with the guarantor.
Furthermore, an agreement arises between the credit customer and the guarantor by law. This states that the borrower is obliged to reimburse the amount paid if the agreed guarantee is actually used against the guarantor.