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?
- Creditworthiness – how to increase it?
- What is creditworthiness?
- What determines your creditworthiness?
- How do you check your credit standing?
- Creditworthiness and car loan.
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?
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?
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?
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
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.