The decision has been made. It is time to apply for a loan
Almost everyone who has a Norwegian national identity number and a residential address in Norway, can apply for a consumer loan - unsecured. It is usually granted to those who have income from work and even to those who receive work assessment allowance (AAP). All these factors depend on the individual bank’s requirements.
Where is it best to start? Begin with sending inquiries to the banks to check if you are eligible for a consumer loan. It is also necessary to determine your creditworthiness.
Getting a loan in Norway - what can possibly go wrong?
Our clients’ stories show that it is easy to overlook something or stumble over an unknown rule. Most of these obstacles can, fortunately, be overcome.
Let’s take a look at a few loan application scenarios and analyse what could go wrong on the way to obtain financial resources to implement your plans.
Problem No. 1: the tax return for the previous year has not been filed
How is it? You have been in Norway since 2017, you have been working and settling your tax meticulously and now you decide it is time to get a loan. However, when you consult a loan advisor they analyse your application and inform that you would not receive a loan at the moment.
What is the problem? Your tax report on BisNode concerns only 2017 and 2018. Important information: Experian and BisNode are systems that evaluate creditworthiness for financial institutions. The reports contain information on, among others, income for previous years or current debt collection processes.
What can be done? Before applying for a loan, it is worth checking your creditworthiness in these systems. If, after logging into your account in BisNode and Experian systems, you will notice deficiencies in tax reporting, you can send a request to update your reports with the tax return for the previous (2019) year. To do this, you can send an e-mail with your last Skattemelding.
Problem No. 2: no registered address
How is it? Three years of staying and working in Norway is a long time, but we all know how it is when it comes to formalities. We avoid them until it is absolutely necessary to take care of them. Renting an apartment is quite comfortable - who would remember to register the address in this situation? Nevertheless your loan consultant pays attention to this detail.
What is the problem? Without registration there is no loan.
What can be done? You have to register your address in Norway.
Problem No. 3: no address information in the systems: BisNode and Experian
How is it? You already are a happy and REGISTERED resident of Norway. What could possibly go wrong? You proudly resume your loan application, but your loan advisor is bearing bad news again. So, what is it this time?
What is the problem? Your information has not been updated in the systems: BisNode and Experian. The same mistake can occur after you change your national identity number.
What can be done? Before filing a loan application, you should sign into BisNode and check the current status on your profile. If you see outdated information, you can contact BisNode and request an information update.
Problem No. 4: debt collection
How is it? You are glad that you have just paid off the collection account... or maybe you are about to finish paying it off? It seems that there are only a few hundred kroner left...
What is the problem? ... it turns out that you have the status of a debtor, [link: https://www.multinorfinans.no/blog/otrzymales-inkasso-doradca-finansowy-radzi-co-robic--15] which makes it impossible to take out a loan in Norway. Upon reflection, you remember this parking ticket from a few months ago...
What can be done? You should immediately contact the creditor and pay off your debt. Then, remember to also contact BisNode regarding the removal of the entry about the debt by submitting the repayment confirmation.
Problem No. 5: other debts
How is it? You are unstoppable. The collection is settled, a holiday loan from a few months ago is almost repaid and your two credit cards you barely use, give you a great sense of financial comfort. After all, it is better to have some security “for a rainy day” than not to have it.
What is the problem? Since you do not use your credit cards on a daily basis, you did not mention that you have them in your loan application. It was a mistake. Credit cards that were not listed right away, loans, car loans, mortgages and even account limits make it often impossible to get a loan in Norway.
What can be done? In this situation you have to supplement information about your current debts, including unused credit cards. The credit limit on your credit card is treated as a debt, which may reduce your creditworthiness, therefore it is best to cancel unused credit cards.
Problem No. 6: a large number of debts
How is it? As a happy owner of two credit cards and a loan you are repaying quite fast, you are in clover, you have a sense of security but you also are blissfully unaware. Remember when cousin Jack mentioned good credit terms in of the banks when you were considering taking out a loan to renovate your daughter’s bedroom? That time you almost decided to get another small loan?
What is the problem? Every single debt or credit card (even if you are not using it) lower your creditworthiness. Information such as confirmation of your poor financial situation are collected by the banks. The regulations say that a borrower's total debt may not exceed five times their gross income. The bank also checks if you would be able to pay off your debt if the interest rate increased by 5 percentage points.
What can be done? Avoid too many unnecessary credit cards and loans.
Problem No. 7: you are applying for a too large amount
How is it? You have learned that you can apply for a loan up to 500,000 NOK. Since your earnings are rather good, you decide to take advantage of the limit and apply for a loan in the amount mentioned above. However it turns out to be problematic.
What is the problem? Despite your quite high income, you do not have an appropriate credit history. In this situation a bank probably would not offer you a loan higher than 350,000 NOK.
What can be done? Fortunately, it is not always the case. Sometimes a client who has been staying in Norway for many years, has a high income and a personal identity number assigned a long time ago, gets a loan for the requested amount, despite the lack of credit history. You can also consciously build your creditworthiness by earning the confidence of the bank. How? Take advantage of small loans, e.g. for household appliances, that you will be able to pay off quickly, which will help you build a favourable credit history.
Problem No. 8: your income is too low
Luckily, this problem does not concern you because you earn 480,000 NOK a year. It is, however, worth remembering that in order to be granted a loan in Norway, it is necessary to have documented annual gross income of min. 220,000 NOK.
Problem No. 9: limited knowledge of the Norwegian language
How is it? You got a call from the bank and someone was trying to communicate with you in Norwegian. It was unfortunately impossible because when it comes to speaking Norwegian, you can only order a taxi, buy sardines and greet your neighbour. Well, what can you do if you spend time with your fellow countrymen on a daily basis and you actually do not need to learn Norwegian.
What is the problem? You have just missed a first-hand information that you have been granted a loan. The bank has also prepared a loan agreement and a formal question related to it.
What can be done? It is best to learn useful phrases in Norwegian, if only for such conversations. In this situation you have not lost anything, because your loan advisor also gave you the good news. However, it is worth being able to quickly provide the bank with necessary information by phone - without intermediaries, saving time.
Problem No. 10: no BankID
How is it? You have repaid all debts, you have completed and updated all data in BisNode, now nothing can stand it the way of getting that loan. Then a bank consultant calls in this matter. There seems to be just a little snag.
What is the problem? It turns out that you have not enabled BankID or even do not have a security token. Without this options you cannot sign a loan agreement.
What can be done? You need to order a security token in you bank. If you have a token, but you do not have BankID, contact your bank to enable this option. If you used your passport when you were setting up your bank account, a simple phone call should suffice. Otherwise, you will have to visit the branch.
Getting a loan in Norway - mission accomplished
Is it possible? Of course is it. After numerous mistakes you finally sign a loan agreement, the bank pays you the grated loan amount and thus you have 350,000 NOK which you can spend to implement your plans. All in all, it was not that bad. In the future you will be more aware and wiser with a few experiences.
What do you need to remember after the loan amount has been paid to you? About paying the instalments on time, to consider loan insurance and also about a possibility to refinance your debts when a favourable offer appears on the horizon.