What is conditional credit and how does it work?

What is conditional credit and how does it work?
conditional credit

Conditional credit: Having the credit application approved is the goal of clients seeking real estate financing. But, to be successful, it is necessary to fulfill some prerequisites demanded by the bank itself. In this post, you will find out what conditional credit is and how it works. 

What does conditioned credit mean?

Many people still have doubts about what conditional credit is, including when hiring financing. Therefore, understanding the subject is important for the customer to plan financially before applying for credit at banks. In addition, it is an alternative to anticipating future unforeseen events.

In general terms, conditional credit means that some conditions of the real estate financing agreement have not yet been fully approved by the financial institution. 

This may be due to the customer’s intended value or other requirements that have not been met. It is worth remembering that, even if the person has proven income, the credit can be conditioned.

How does conditioned credit work?

Credit conditioning works in two contexts. In one of them, the customer obtains conditioned credit because he has other debts; that is, part of the income is committed to other payments. 

In other situations, what prevents you from fully acquiring credit in financing is precisely the negative history of indebtedness. Often, the banking institution itself offers other means for the customer to be able to finance the property. 

However, in these cases, the bank outlines other prerequisites for granting credit. One of the solutions found by finance companies is to offer a lower value than that proposed by the customer. This allows an input value to release the required value. 

What to do if credit is conditioned?

When the customer makes the credit request but is conditioned, there are some possibilities to solve the problem. The most recommended thing is that the client is aware of what motivated the conditioning, but this information is not always passed on. 

The more data regarding the reasons that led the bank to condition the credit, the better for the customer to obtain the desired value. In any case, the following are the attitudes that can be taken in the face of the situation:

  • The customer may or may not accept the requirements made by the bank for credit release.
  • Resolve financial pending issues that are in the customer’s name. This can refer to very high debt.
  • Try to get approval without conditioning again.
  • Clear name at Serasa or another credit risk analysis institution.

It is worth noting that, to request any financial services, the client must have a clean name. This is one of the premises for acquiring credit and making investments, among other financial activities. 

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What differentiates conditioned credit from credit disapproval?

When the credit is conditioned, it means that the customer still has a chance to resolve the pending financial issues and obtain the credit amount required in the first request to the bank. 

In other words, only upon adequacy and acceptance of the requirements imposed by the financial institution, the client will be able to carry out the real estate financing with tranquility. On the other hand, bad credit doesn’t work that way.

When the credit application is rejected, there is no agreement between the customer and the bank. In this case, the applicant must make a new application. Therefore, it is important to know the credit conditions of banks. Generally, requirements vary greatly from one financial institution to another.

How to avoid credit conditioning?

To avoid having credit conditioned, there are several useful tips. No matter what the situation, the client should always keep in mind some basic factors that directly influence conditional financing

The most common ones can be requesting credit incompatible with the customer’s income, contracting debts in sequence, and having a dirty name. Here are some recommendations to avoid credit conditioning:

  • Pay bills on time and keep your name clean. In any situation, this will help to increase your credit score, which is used as one of the crucial factors in getting financing.
  • In addition, it is important to understand how Cadastro Positivo works. Generally speaking, it is a kind of database that analyzes the customer’s reputation regarding financial commitments. This too, in some way, is used to grant credit.
  • Don’t make too many debts one after another. It is important to remember that this is negative for contracting financing, loans, and installments in banks.
  • Maintain a good relationship with the bank where you are already a customer. This will be important when making real estate financing since the institution knows the profile of the clients.
  • Prepare a financial reserve, in case the credit is conditioned, but there is the alternative of putting in some amount. 


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