In the Scandinavian countries, the aim is to go cashless, with more people using credit cards and banking via online platforms, obtaining loans using their mobile devices, which includes text messages or SMS loans.
That’s especially true in Norway. Open here for details on guidelines for SMS loans in Scandinavian countries.
The government in these countries, particularly in Norway, is starting to enforce regulations on SMS lending; however, as residents develop greater amounts of debt, they need help breaking free from it.
One of the new guidelines being introduced to banks is the expectation that they begin checking borrowers’ creditworthiness and financial stability, which wasn’t part of the process previously.
That allowed access to loans for virtually anyone without the thought process of whether the balance could be repaid. That runs the risk of default in many situations for these unsecured, short-term, low-balance loans.
Now that creditworthiness and financial standing are part of the process, how can a Norway resident ensure approval of their SMS product? What will the lender be looking at? Let’s look at credit in Norway, what’s considered good, and how to reach that point.
SMS Loan Regulations in Norway
SMS lending in Norway is facing new guidelines according to government regulations requiring banks to look at borrowers’ creditworthiness and financial standing. These rules are meant to avoid the potential for excessive defaults from clients obtaining these loans who can’t afford to repay the balances.
A strong credit score gives greater access to loan products, including SMS lending in Norway, with better interest rates. Plus, there will be less hassle with other financial solutions such as credit card approval. How do people build a favorable credit score, and what is a good credit score in the country?
Credit Scoring System In Norway
A person’s credit score is the number that depicts creditworthiness and helps financial entities discern how great of a risk a borrower will be to lend funds. The Norwegian Ministry of Finance stipulates that banks in the country must secure these details before loans, including SMS lending, can be processed.
Credit scores range from either 1-100 or can range from 1-1000 in Norway, with those falling in the 1-20 range being the highest risk for a bank and anyone falling between 71-100 being the least risk for a bank to lend to. The higher your score, the better opportunity for reasonable rates and terms.
The lowest credit scores will receive the highest rates, or the loan will be rejected.
The country has four credit reporting bureaus, with one of these supplying each person’s score based on data pulled from taxes, assets, income, debt, and demographic details like residence and age. An individual’s repayment history will impact the score significantly.
What Steps To Take To Improve Credit Rating
With Norway’s credit system being based on stable income and an individual’s age, figuring out methods for rapidly improving creditworthiness is not readily available. Still, there are steps you can take to steadily and gradually keep the score within a reasonable range or get it to that point.
1. Payment remarks drastically lower the credit score
Payment remarks will drastically reduce credit ratings making it essential to avoid these. A common reason for getting payment remarks in the country is when the repayment of invoices continues to be delayed despite the creditor’s attempts to collect on the account.
No one will be caught unaware by a payment remark. There will be plenty of notices that an account is in default before the remark is registered with the bureau, and you will be given ample opportunities to repay the debt before this occurs.
The creditor will assign a debt collection agency from whom you will receive a collection notice and final opportunity to make repayment before being notified that the claim will be turned over for legal action. At that point, the payment remark can be registered when repayment is still neglected.
Fortunately, as soon as the debt is corrected, the remark is immediately dropped from the profile, and the score will no longer be negatively affected.
2. Personal assets should be increased if possible
Your credit score can improve if you increase your personal assets. This signifies financial stability. Credit reporting bureaus access asset details from tax returns. They consider the registered assets from the previous year’s returns.
It takes time before increasing personal assets will show on the tax return, affecting the credit score.
3. Income and financial standing play a key role in credit score
If your income fluctuates considerably each year or is relatively low, this can negatively affect your credit score. A priority is securing steady, stable, and secure employment with a healthy income if you hope to improve your credit score in time.
4. Minimum debt should be your goal
Debt should be repaid quickly. That means keeping balances low and manageable; with credit cards, that couldn’t be truer. Regardless of the credit limit, experts suggest keeping balances to an amount that can be repaid with each monthly invoice to avoid carrying balances to the next month.
This is the ideal way to avoid interest charges or associated fees. Consumer loans should be repaid rapidly. When taking a loan, it’s wise to read the agreement thoroughly to ensure there are no fees like prepayment penalties disallowing early repayment.
Everyone’s goal is to repay balances as soon as possible. Minimal debt means a higher interest rate. The higher the interest rate, the better opportunity for access to most financial solutions, including SMS lending.
5. Proof of residency and staying in one place
When applying for any loan in Norway, proof of residency is a requirement, and that residence needs to be registered. If the home is not registered, the loan will be rejected. Also, when moving from place to place often, a credit rating can be negatively impacted.
Living in an area where loan defaults are a common occurrence will mean a lower credit score regardless of if your credentials are stellar. That usually influences where people decide to set up a home.
6. Age is a consideration in credit scoring
While you wouldn’t think age should be a consideration with your credit rating, the reason the bureaus factor this data is the overall statistics that come with age. That includes job availability and income potential.
It’s suggested that the reporting agencies supply younger individuals with low scores as they do for people over the age of 70. Anyone ranging in age from “the mid-40s” will see high credit ratings mostly because they’re in their prime for a promising career and potentially the highest income potential.
Why You Should Check Your Credit Score
Those with a national identity number and BankID have the ability to check their credit score with a reporting bureau like Bisnode. It’s essential to stay on top of your profile to know if there are remarks on the history and to see where your credit score stands if you need to improve.
As mentioned, remarks can be removed at once if you repay the debt. There’s no reason to have remarks dragging your score down if you can correct these readily by making the repayment.
Quite a few things can occur to raise your credit score. Primarily you want to ensure that you have a steady, stable, healthy income, plenty of valuable assets to show you’re financially sound, and minimum debt. The goal is to repay invoices as quickly as possible.
If you have loans, make sure these don’t have prepayment penalties before committing so they can be repaid rapidly. Credit card balances should be manageable so the balance can be repaid monthly to avoid accruing interest and associated fees.
It doesn’t have to be challenging to keep positive creditworthiness or a sound financial standing, except for age. That’s somewhat out of your control; however, age might not be such a concern if all the other factors are above average when your data is reviewed.
Final Thought
Now that sms lån i Norge or SMS loans in Norway must be reviewed for creditworthiness and financial soundness, you should know where you stand in these areas. If you have a national identity number and a BankID, you can check your credit with a reporting bureau like Bisnode.
If you’re at a less-than-favorable place, it’s not impossible to make improvements; it’s relatively easy. It will just take some time and effort.
Salman is a prolific environmental writer, and has authored more than 500 articles in reputed journals, magazines and websites. He is proactively engaged in creating mass awareness on renewable energy, waste management, sustainability and conservation all over the world.
Salman can be reached on salman@cleantechloops.com
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