Before granting you a credit, the financial institution must evaluate your creditworthiness, ask you some questions and ask you for supporting documents. This is an update on the audits conducted by the bank.
Not all credits are available to everyone
The bank must ensure that the conditions for obtaining the loan are met by the borrower. Certain types of loans, for example, are reserved for persons whose income does not exceed a certain amount (in particular, loans for social purposes). In case of the business payment processing this is very important now.
A minor cannot take out any credit: real estate credit, auto-moto credit, revolving credit, bank overdraft authorization.
Bank does not have to give credit
There is no right to credit. The financial institution always has the right to refuse to grant credit. He does not have to justify his refusal decision.
The bank must evaluate your creditworthiness
Your financial situation must be compatible with the amount borrowed. As soon as you borrow, you agree to repay this credit, in several monthly installments, over a fixed term at the time of subscription. The bank must therefore ensure that you are able, financially speaking, to meet these repayments.
The credit institution must check your creditworthiness and repayment capacity, taking into account your debt ratio. It is customary that the monthly payments do not exceed one third of the income.
- The case law clearly establishes that the bank has the duty to warn the unsuspecting borrower in writing about the risks associated with a credit transaction taking into account its financial capacity and the debt that results from the transaction.
- Any advertising (excluding broadcast advertising) for a consumer credit must include the words “A credit commits you and must be repaid. Check your repayment capabilities before you commit” (Article L311-5 of the Consumer Code).
If the consumer credit is distributed in the store (assigned credit or revolving credit) or subscribed remotely (internet or telephone) , the lender must establish, in writing, a fact sheet (known as the “dialogue form”) which mentions the amount of your income, expenses and debt for loans you have already subscribed and in repayment. This form must be given to you and you must sign it by declaring on your honor the accuracy of the information provided. For credits over € 3,000, you must also provide proof of identity, residence and income.
Your contact will also check if you are registered for payment incidents. The law requires the lending institution to consult the National Personal Repayment Incident File (FICP) before granting a credit (for consumption or real estate), overdraft authorization or annual renewal of a revolving credit. This consultation makes it possible to know the persons who have an incident of unresolved credit payment or who have a file of over-indebtedness in course (within the limit of the legal deadlines).
FICP registration does not prohibit the financial institution from granting credit. But most often, the bank will refuse to give a new credit, whatever it is. Such a decision also protects the borrower, preventing him from increasing his indebtedness and his financial difficulties.
Verification of the appropriateness of the credit to the financing project
The financial institution must inform the borrower about the characteristics of the proposed credit. For consumer credit, it must specify the type of loan proposed: credit allocated, personal loan or revolving credit. And it must submit a standardized pre-contractual form , which indicates in particular the total cost of the loan, the amount of the monthly payments and the interest rate of the loan.