How to improve your credit standing?

Creditworthiness is the ability to settle a financial liability together with interest within the period specified in the loan or credit agreement. How to improve your credit standing? First of all, you should start with controlling your home budget and checking yourself in the debtors’ bases. What else has an impact on increasing creditworthiness?

  1. Creditworthiness – how to increase it?
  2. What is creditworthiness?
  3. What determines your creditworthiness?
  4. How do you check your credit standing?
  5. Creditworthiness and car loan.

How to improve your credit standing?

How to improve your credit standing?

Creditworthiness is the ability to repay a financial liability incurred together with interest within the period specified in the loan or credit agreement. There are many simple ways that have a huge impact on increasing creditworthiness. However, it should be borne in mind that they will not improve financial liquidity within a few days.

Regularity and persistent pursuit of goals set to improve creditworthiness are very important. So how do you increase your credit standing? First of all, you should:

  • take care of your story in BIK,
  • settle financial liabilities
  • check your credit standing,
  • take care of the largest possible amount of own contribution (for a mortgage),
  • give up credit cards and a revolving loan,
  • take advantage of a consolidation loan,
  • choose fixed installments,
  • control your home budget.

The most effective way to improve your credit standing is to try to increase your monthly net income. A new job or a change of job to a better-paid one will allow you to settle your financial commitment, for example in the form of a car loan loan, whose installments can significantly burden your home budget. It is also important to give up your credit cards or revolving loans. These financial products may be too tempting when there is a shortage of cash. Their liquidation will undoubtedly improve creditworthiness.

What is credit standing?

What is credit standing?

Creditworthiness is one of the most important factors that banks and loan companies take into account when granting financial obligations. The higher the creditworthiness, the greater the applicant’s chance of receiving the financial product for which he applies. Therefore, it is very important to analyze the elements that have an impact on improving creditworthiness before starting the application procedure at a bank or loan company.

The concept of creditworthiness is governed by the legal provisions contained in the Act of 29 August 1997 on Banking Law (Journal of Laws of 2002 No. 72, item 665 as amended).

Art. 70. 1. The bank makes the granting of the loan subject to the borrower’s creditworthiness. Creditworthiness means the ability to repay a loan taken out with interest on the dates specified in the contract. The borrower is obliged to submit, at the bank’s request, the documents and information necessary to assess this ability.

What determines your creditworthiness?

What determines your creditworthiness?

Creditworthiness depends on several major factors. The following factors, such as:

  • amount and source of income,
  • amount of expenses in relation to revenues,
  • borrower’s / borrower’s age,
  • the applicant’s family situation,
  • amount of own contribution (for mortgage loan),
  • credit history and current debt,
  • marital status of the borrower / borrower.

There are many more factors that affect creditworthiness. However, the factors listed above contribute most to the applicant’s creditworthiness. Keep in mind that the documented credit history is also important. The extent to which a specific entity has settled previous financial obligations and whether they were repaid on time contributes to the positive decision of financial sector institutions.

How to check your credit standing?

How to check your credit standing?

There are several ways to check your creditworthiness. The first is the creditworthiness calculator. It will approximately show the checker the amount of credit or loan he can receive. The creditworthiness calculator should include such data as:

  • Brutto income,
  • charges for an apartment,
  • the amount necessary to support oneself and the family for a month
  • installments of other financial liabilities,
  • loan / loan interest rate,
  • repayment time for the financial liability.

Creditworthiness can also be checked during a visit to any branch of a given bank or when applying for a loan at a non-bank institution. However, it should be borne in mind that frequent inquiries at banks about the possibility of taking loans are recorded in the BIK.

Creditworthiness and car loan

Creditworthiness and car loan

People whose purpose is to take out a car loan should also be creditworthy. Most non-bank institutions check their liquidity and the ability to repay a financial liability with interest within the period specified in the loan agreement. Loan companies usually verify applicants ‘data in BIK databases, which is why it is very important to check yourself in the debtors’ registers once every 6 months. Many loan companies also offer their clients a different solution. They can take out a loan to own the car. Then the loan will be secured by the car owned by the borrower.

Online Credit β‡’ Borrow up to $ 75,000

In a world where speed has become essential, online credit has naturally imposed itself on conventional credit. Effective way in case of temporary need for financial contributions, its operation remains unclear for most people. Back on nine key points to master the credit online:

What is an online credit?

What is an online credit?

It must first be borne in mind that a credit is an act by which one person makes a cash advance to another and the amount of which must be repaid within a generally agreed time. Credit has a very ancient origin, even preceding the birth of money; the modern form of the loan appeared gradually from the fifteenth century and experienced a considerable boom with the expansion of banking institutions during the Industrial Revolution in the nineteenth century. Today, there are different types and families of credit depending on the destination that is made funds.

The operation then slowed down all kinds of procedures for which credit was needed, which could be dramatic when it was intended to pay an unexpected expense.
Credit institutions have redesigned the system and started to make credit by telephone in the early 1980s. The means of applying for credit have subsequently evolved along with the emergence and democratization of new telecommunication technologies. This is how the Minitel became a credit application tool; then, from the 2000s, internet. This evolution has allowed the lenders to expand their audience and realize savings.

This modern online credit system is still in perpetual motion. Indeed, while the existence of credit demand by internet is now widely available, directly online trading remains a recent innovation; at this point that many credit organizations are not yet mastering it (which is why it is still difficult to deliver an online mortgage right now).
Online credit is in fact a product identical to conventional credit. Offers and expertise are similar, which is why both contracts follow the same legal regime.

Nevertheless, the advent of online credit has made it possible to reconcile two key factors of servicemodern: speed and simplicity. With a simple internet connection, the potential borrower can complete the files for his application and have a precise idea of ​​the amounts and conditions of the loan by doing simulations. Connected life has accustomed us to meet our needs as quickly as possible; and we must admit that our desires are often revealed during our free time, that is to say in the evening or on weekends.

In short, at a time when traditional banking institutions are closed. Online credit also makes it easier to compete between the different offers, particularly thanks to the different comparative sites. Online credit therefore appears to be an efficiency factor, making it possible to obtain the best and most adapted offer. An ever changing evolution of online credit: the example of credit 2.0. Online credit is at the center of the evolution of telecommunications and undergoes changes through them. The latest example is social media with fintech and new financial companies, including Cedilikeme, a Mexican company. With catchy slogans (“if your friends trust you, too”) , they allow an individual to get support from his friends on Facebook to earn a credit.

How to get credit online?

How to get credit online?

Most major credit agencies present a similar procedure for obtaining credit online, often within days and without moving. There are three major stages: the request, the signature & the sending, the reception.

Step 1: Online Credit Application

Before you even ask for your loan, you have to think about how much you can borrow based on your income and needs, that is, your borrowing capacity. Most organizations, offering ways to subscribe to credit online, set up credit simulators. Roughly, they are calculators that indicate the amount that can be borrowed according to the income of the person who is the source of the demand (that is to say, the net taxable income), but also of his / her debt ratio which represents the amount repayments of all loans already subscribed. It is a guarantee of the financial health of the individual (NB: a good debt ratio is one that is less than 33%).

Once the desired amount has been defined, it is strongly recommended to simulate several credit scenarios online by modulating the duration of repayments. The principle is simple: the longer this period increases, the more the cost of monthly payments, and therefore of credit, also increases.

The duration must therefore be chosen according to the borrowing capacity previously defined keeping in mind that a too short duration, such as a too long duration, can paralyze, in the short or long term, all the financial capacity of the ‘borrower. This is why it must be carefully thought out thanks to the different simulators.
Simulation remains important for determining its borrowing capacity, but it is only effective if it is operated on several online credit sites.

Step 2: Accepting the preliminary offer – signing and sending documents

At the stage of accepting the online credit proposal, two cases must be distinguished according to the amount borrowed. In fact, for the small amounts, no guarantee is necessary, that is why it is enough to indicate its acceptance to the lender organization which will send in return a loan contract to sign and to return by postal way, or even by electronic way in some cases.

Several documents are typically requested from the borrower at this stage: a RIB, the last three payslips or the last sheet of taxation, the photocopy of the identity card, an invoice in case of assigned credit, …
However, for higher amounts, it is often necessary to move to the place of the borrowing agency; especially for a mortgage where a deposit, or even a mortgage, is necessary. Online credit, in this type of case, is then simply limited to the request for prior offer. However, it remains a useful way to detect the organization offering the most interesting offer and remains, as such, a tool for speed.

Step 3: Receiving funds

The immediate acceptance of an offer of online credit for consumption is possible but in the case of mortgages, it must be sent by mail or other durable medium, in accordance with Article L313-24 of the Consumer Code .
Since 2015, and the entry into force of the Macron law, the delay of repentance makes it possible to return to its credit commitment online under 14 days in case of consumer credit.

This period begins the day after the signature of the offer and is extended until the next business day if the fourteenth day is a Saturday, a Sunday or a holiday. The formality is simple: just use the withdrawal form attached to the contract.
Beware, this period of 14 days is valid only in case of consumer credit, ie a credit that relates to transactions other than those related to real estate and to buy consumer goods, for an amount between 200 and 75000 € with a repayment period greater than 3 months.

Online credit: good or bad innovation?

Online credit: good or bad innovation?

The emergence and expansion of online credit follows a global movement of order and online management of goods and services, all enabled through further development and wider access to telecommunication innovations. The adaptation of the loan contract to the digital age brings significant benefits:

  • Speed, flexibility and comfort :
    • The request and / or the subscription on-line exempts a passage in agency and thus the making of an appointment. Although a home loan requires the meeting of an advisor for the conclusion of the contract, the preliminary steps – often long and tedious – can be done on the Internet.
    • An online credit application can usually be made at any time of the day and week.
    • Similarly, the communication of supporting documents is done directly by electronic means.
    • The response of lenders is given in a shorter period of time than in the case of a standard procedure (usually between 24 and 48 hours).
  • Simplicity and ease :
    • Subscribing to an online credit is a simple process since the potential borrower is guided from the first to the last step via intuitive platforms with just a few clicks.
    • The communication is done by telephone, email, internet chat, videoconference, …, which allows to easily have answers to his questions.
    • The management of an online credit can be done directly on the Internet via his personal space. This allows easy access to its schedule and track its credit at any time. Changes can even be made online.
  • Financial economy:
    • Fees are mostly lower and many institutions do not charge a fee for certain types of credit online. In addition, tariff promotions are offered on a regular basis by online banks.
    • Thanks to the speed and accessibility of the application procedures, it is easy to find the most advantageous offer by comparing the offers. Comparative sites specialized in online credit exist to facilitate the task of individuals. This is a major advantage of online credit since the applicant’s personal bank often does not offer the best offer in the market.
  • Adjustment : Online, it is easy to tailor your needs and make multiple requests for free and without commitment depending on your projects and resources. Online credit applications are the subject of a personalized study to benefit from the best conditions for each. This allows you to react quickly if you have to revise your projects down or, on the contrary, borrow a bit more than you expect.
  • Forecast: The rates and ancillary costs are known at the beginning, from the request of credit on line, and make it possible to subscribe without unpleasant surprises.

However, a loan agreement remains a major commitment; the underwriting facility can sometimes be a danger. This is why we must remain vigilant on several points:

New EU Residential Property Policies – Real Estate Loans

New rules in real estate financing

New rules for real estate financing were introduced this March. It is the EU residential property guidelines. The result is often that approved loan applications are withdrawn and the potential borrower is no longer considered creditworthy. As a result, the rules for granting loans have become stricter. It is questionable how young families in particular can still get a loan application approved.

Change in the rules for the granting of real estate loans

Change in the rules for the <a href=granting of real estate loans” width=”640″ height=”452″ />

To date, banks have not only used the amount of applicants’ income to approve a loan application. The value of the property was also viewed as security and was included in the calculation. The second point, however, changes with the requirements of the EU residential property directives. The value of the property is now irrelevant for the rating of the creditworthiness. Banks now only rank borrowers based on income and existing assets.

Aim of the new guidelines

Aim of the new guidelines

The main aim of the new directive is to protect private individuals from over-indebtedness. However, quite a few credit institutions raise the alarm. The reason for this is falling numbers in lending. The Astro Finance- und best bank alone had 9% fewer loan commitments in the first half of the year than in the previous year. According to the credit institutions, the new regulation means that certain customers will no longer be approved for loans. Elderly people are particularly affected, who want to convert or modernize their homes to suit their age.

The reason is that the income is insufficient to repay the loan with the remaining life expectancy. Previously, banks could still grant a loan. Despite the insufficient repayment of the loan, the banks were able to offset the difference by the value of the property.

Young families suffer from the scheme

Young families suffer from the scheme

The EU residential property directive does not only affect older people. Young people, especially families, are also affected by the change. Despite regular income and a not insignificant amount resulting from the difference in income and expenditure, loan applications are now rejected. According to the new calculation, despite the possibility of repaying a loan, they are not creditworthy. It was not just the banks that raised this issue. Politicians are now also dealing with the regulation of lending. However, the Cream bank has not yet seen a slump in the residential loan segment.

Improve chances of getting a loan

Improve chances of getting a loan

Despite the new real estate loan scheme, middle-income families still have the chance to get a loan application:

  • For example, it can be checked whether funds such as loans can be used by Capital Lender.
    The repayment modalities can also be chosen in the longer term.
  • Residential Riester or building society contracts are also helpful. These are particularly useful when it comes to lowering interest rates.
  • Parents can also help increase the chance of a positive loan application. For example, a gift increases borrowers’ capital. Parents can also sign the purchase contract and thus transfer part of the land charge to their own home.

In any case, consumers have only one thing with a rejected loan: perseverance and patience when looking for the right credit institution.