How to check and calculate your creditworthiness?
Banks granting loans, before making the final decision on granting or refusing it, carefully examine the creditworthiness of their clients. What is it about and what can be done to improve it, and thus – negotiate better contract terms?
What is credit standing?
Everyone who has ever applied for a bank loan has certainly met the concept of creditworthiness. According to the definition contained in the Banking Act of 29 August 1997, it is “the ability to repay the loan with interest on the dates specified in the contract”. For this reason, it is thoroughly checked by lenders, and based on its assessment, customers can get funding or refuse. It is worth noting that the assessment of creditworthiness in each bank may look slightly different. Therefore, even if one of the institutions proposes a contract on unsatisfactory terms, this does not mean that the customer will not receive a better offer in another bank. You should also know what your creditworthiness depends on.
How is your creditworthiness assessed?
Creditworthiness consists of many important factors. Income and their source are the most important ones. Therefore, banks require their clients to provide income statements and take into account the duration and form of employment. In the study of creditworthiness, the amount of regular expenditure in relation to income received, the age and family situation of the person requesting the commitment, the amount of own contribution, as well as credit history, current debt and history in economic information bureaus are also of great importance. The above-mentioned factors are undoubtedly the most important in assessing the customer’s creditworthiness. However, issues such as the education or place of residence of the borrower may also be taken into account. On this basis,
How to check your credit standing?
Even before going to the bank, it’s worth trying to calculate your creditworthiness yourself and determine the amount you can count on. How to do it? First of all, calculating the monthly income and deducting from it all expenses regularly incurred at the same time. Therefore, it is necessary to take into account bills and fees related to the maintenance of the house, as well as the costs of fuel, food, clothing, as well as the amount of installments paid. It is worth noting that banks also take into account the number of people in a household and the age of family members. To make the task easier, calculate your creditworthiness using special online calculators.
How to increase your credit standing?
It happens that the creditworthiness of the bank’s client is not sufficient for him to obtain the commitment. However, it’s worth knowing that there are ways to improve your credit standing a bit. How to do it? You can apply for a loan together with your spouse or other family member. It is also worth planning to collect the largest possible own contribution when buying a flat before submitting your mortgage application. Remember that because your creditworthiness is reduced by other obligations, eg credit cards or debit on your bank account, it is often a good idea to opt out of them.
When preparing to take out a loan, you should also take care of your financial credibility. Because banks check their clients in the Credit Information Bureau and the Economic Information Bureau, timely fulfillment of obligations and paying bills on time allows you to build the image of a person who has no financial problems, so he is a reliable customer for the bank. It may also be a good idea to take out a quick installment loan. The ability to set repayment installments allows you to plan your expenses better and pay your debts on time, which of course has a positive effect on our credit standing and can help you apply for loans for larger amounts.