The bank is primarily interested in receiving a timely and complete repayment of the borrowed money. With interest rates far lower than 6 or 7%, there is also little room for the complete write-off of a given loan. Although the term “allowance” used by the banks may sound a bit finer, it would ultimately be a lot of effort to recover the open installments and a partial write-down would occur. Therefore, the banks try to lend to all those who are likely to repay the loan. As if the bank tries to get a picture of the borrower: A current proof of income gives an indication of existing, predictable income. Estimating the disposable monthly income after deduction of the cost of living provides information as to whether financial resources would be available to repay the loan.
The private credit entry offers a look into the past
Anyone who wants to have a loan despite the completed private credit entry should put himself mentally on the side of the lender. Of course, a previously controversial claim with eventual repayment represents an indication that the customer has taken over financially at least once. However, the entry is also an indication that this problem could be solved. So an entry finally closed by repayment is just a warning light for lending and not a stop sign. Credit in spite of the completed private credit entry then remains unchanged, but the lender will look at the data more closely or may see a slightly increased risk.
What does this increased risk mean
In the end, this information has two effects on the lending: On the one hand, it may be that the loan despite completed private credit entry with a slight risk premium – ie an increased interest – is provided. On the other hand, the bank can tell you that you would be loaned a slightly smaller amount.