Sometimes there is a moment in life when we will need to make a decision to take a loan, even for an apartment or a new car, or for general renovation. This is a good decision, but remember to take care of your creditworthiness, because without it the path to credit will be impossible. And what it is and how to build it, you will learn from the article below.
What is creditworthiness
There is a lot to talk about creditworthiness because it has many factors. Most of them are influenced by the future borrower. Being aware of the importance of this aspect, we can try to care for its quality in order to achieve, if necessary, the goal of taking a loan.
So what is this ability?
banking law defines this concept as the borrower’s ability to repay the loan on specific payment dates. Of course, there are two components involved: both capital and interest. The more you should take the topic seriously. Therefore, before the bank agrees to grant a loan, it will subject the potential borrower to a credit analysis. This is a time-consuming procedure, requiring the collection of many documents that the customer must provide to the bank where he wants to take out a loan. Then it undergoes the process of assessing creditworthiness. Then be patient and wait for the result.
Can anyone apply for a loan, even without the ability?
Banks have their own methods of testing creditworthiness. They may be slightly different in each bank, which is why some applicants for loans apply at several banks at the same time, knowing that they may not meet certain criteria and thus their loan application will be rejected.
However, there are situations (extremely rare) when a bank may grant a loan to a non-compliant person, but you must then present a plan to remedy the financial situation, whether in the company or in the household. These are incidental situations and we should not count on them trying.
Therefore, for many people the ideal and the only solution may be to use a loan on the website, where on simple terms, even when credit standing is an obstacle, you will be able to take a loan quickly and conveniently, and in addition completely online, meeting the minimum of formalities.
How to calculate your creditworthiness?
There are many ways to calculate what your creditworthiness looks like in a particular case. We can try to calculate it ourselves, or use various calculators on the Internet, or go to a specific bank and ask for help in this regard. It will be more complicated especially with mortgages for a house, flat or real estate. So what is considered?
- savings – from 10-20%, good when they are, because they will significantly increase our credit standing.
- amount of monthly earnings
- the amount of monthly expenses (let’s calculate the fixed and add to this the margin for additional, unforeseen costs)
- finally, look at the difference between income and costs.
What affects creditworthiness?
It should also be remembered that there are many aspects that we can influence ourselves. If we manage to do it well, we will hand over our loan application to the bank without any problems and stress and it will certainly be positively assessed.
Well, the ability is affected primarily by:
- arrears in repayment of obligations – even a short exceeding of the deadline is already a default in the contract and will be taken into account in the credit analysis. And because it will be visible in BIK (Credit Information Bureau), it will unfortunately affect our credibility
- lack of permanent sources of income – if we do not have a permanent job, the income of which can be documented, this is a reason to worry, unfortunately.
- lack of savings can also be taken into account and sometimes tip the balance against creditworthiness.
Reasons for refusing a loan.
We have already mentioned it above, but let us analyze it deeper.
Most loans are refused due to lack of creditworthiness.
The second point is that customers often don’t have the minimum credit knowledge they want to apply for. Then time increases and generates a lot of problems.
Among other things, it may cause a decrease in creditworthiness, as each application for a loan submitted by the Customer is reported by the bank to the Credit Information Bureau. Therefore, it is not irrelevant whether we will fulfill the formalities correctly or not.
The lack of a permanent job, which we can document in the form of real documents confirming our income, also makes us unbelievable.
So let’s take care of all these issues sooner and certainly our creditworthiness will be at an appropriate level.