Loans with bad credit: is it possible?

1. Can I get a loan despite being subject to debt collection?

In certain circumstances you may be able to get a loan even if you are subject to debt collection. This is assessed individually on a case-by-case basis. If debt collection procedures are in place, the credit provider checks various aspects such as the number and amount of enforcements, your payment behaviour and more. An important aspect is also whether the debt collection procedure has been completed, or is still ongoing.

In all cases, whether and under what conditions you are eligible for a loan depends on the assessment of your credit capacity and creditworthiness. Credit institutions apply different lending criteria and do not provide detailed information on their risk policy in order to protect against fraud. You should most likely expect a higher interest rate. However, in principle getting a loan is possible.

2. It's difficult to get a loan with ongoing debt collection procedures

Debt collection can have a wide variety of causes, and is not necessarily justified in every case. In Switzerland, anyone can pursue anyone for debt owed without any proof. In most cases, however, ongoing debt enforcement procedures lead to a rejection of the loan application.

Important: stay clear of lenders who advertise with slogans like "loans despite debt collection". They try to attract people who have little chance of being granted a loan by reputable borrowers. Often these are dubious financial restructurers based abroad.

3. What lenders pay attention to when conducting a credit check

The Consumer Credit Act stipulates that banks must check the creditworthiness of credit seekers. With this law, legislators seek to protect consumers from becoming over-indebted. However, lenders also check the credit capacity and creditworthiness of loan applicants.

This means they look at how reliably you repay the instalments. To this end, credit institutions primarily consult creditworthiness databases, debt collection offices and residency controls. In addition, they require the applicant to provide documents such as pay slips and leases.

Past debt collection damages your creditworthiness and worsens your credit score in these databases. The reason: based on financial difficulties in the past, the provider statistically assumes a higher risk that they will not receive the borrowed money (on time).

4. Conclusion

You should always check your own creditworthiness. In Switzerland, there are four credit agencies that collect and provide credit data: Crif, Intrum Justitia, Bisnode and Creditreform.

In principle, if you always pay your bills on time and have no further debt enforcements, then your creditworthiness will not necessarily be very poor. This means that getting a loan is possible.