During January – November, residents submitted 2% fewer applications for various financing instruments than at the same time last year. The decline in applications was mainly due to the sharp decline in small consumer credit applications, according to data from the credit history system “Good Finance”.
Applications for small consumer credit dropped by 32% in 11 months. This is the main reason behind the overall decline in the level of applications. If we exclude small credit applications from the total number of applications, we will see that the population’s intention to borrow this year is 15% higher than a year ago. This means that the rest of the financial institutions and telecommunications companies have received more applications for credit and credit services.
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Intentions to borrow in banks and credit unions increased by 14%. Leasing and larger consumer loan applications increased by 5%. 21% more consumers were looking for credit services at telecommunication companies (such as tablet rentals) this year. And they wanted to borrow nearly threefold the population through peer-to-peer lending platforms (P2P).
“The level of applications reflects the general interest of consumers in obtaining one type of credit. There was no major player in the retail credit segment. As a result, there has been a drop in applications there. In the remaining segments, the growth in applications is related to the increasing purchasing power of the population.
It is positively affected by rising employment and wages. Naturally, today ‘s stable public finances encourage some consumers to order credit cards, renew their phone, car or household, says Andrius Bogdanovic, head of a credit bureau Good Finance. – As for the P2P segment, its rapid growth is mainly due to the young age of the segment. P2P operators remain niche players in the consumer credit market. ”
Applying for credit does not mean granting the credit
Depending on the segment, a significant number of applications are rejected. For example, in the leasing and larger consumer credit segment over 11 months. On average, 62% of applications were rejected (compared to 58% in 2015); rejecting 68% of requests.
The most common reasons for rejection are customer overruns of 40% of revenue and fin. liability ceiling, unstable income, strained or bad credit history, filing without spouse’s consent and more.