How can you check your own credit standing? Is it necessary to go to the bank with this issue? And are there any ways to increase your credit standing? Here is all the useful information on this topic!
It depends on your creditworthiness whether you can get a loan in the expected amount. It really depends on getting a loan at all. Banks always check the creditworthiness of a potential customer for the security of the company and the applicant. People with dull credit history, large debts and low salaries are unlikely to incur liabilities either in a traditional bank or in parabanks. The latter sometimes grant loans without BIK, but they always verify the creditworthiness of a particular person.
What exactly is creditworthiness?
Creditworthiness is the ability to pay back the loan on time. Not only the credit value itself, but also the interest that comes with it. When you take out a loan for a long time, you have to pay back more than you borrowed. A loan is not only the sum borrowed, but also all additional fees – such as commission or insurance. Creditworthiness is the basis for granting a loan. If, according to the bank, a given customer will not be able to repay the entire loan on time, there is no way to issue a positive credit decision.
How do banks know who will be and who will not be able to repay the loan? They thoroughly analyze information about a specific person. They provide in-depth analysis of relevant data – based on documents that must be provided as a potential customer and based on information about a given person, collected in places such as BIK or KRD. The Credit Information Bureau, the National Debt Register or other economic information bureaus are places that take care of credit safety. They collect and share data on the credit history of bank customers or non-bank loan companies. If someone has a large debt, or has repaid their liabilities late, it will all appear in their data. This also determines the potential creditworthiness. It is difficult to expect that someone who does not pay one debt,
What affects creditworthiness?
It cannot be clearly determined what exactly factors are taken into account when assessing creditworthiness. Each bank – in addition to generally known elements – also takes into account other ones, so that the same person who received a negative answer in one bank, can sometimes receive it easily in another. Lenders have their own algorithms that calculate the creditworthiness of a specific person and based on them a decision is made. However, there are a few things that are always taken into account. It is about the amount of income received, as well as their regularity. It is not necessary at the moment to have an indefinite employment contract (although with large amounts of loans in some banks there is still such a requirement), but in this case the bank checks,
The greater the stability, the greater the creditworthiness. Banks also take into account the amount of expenses borne by the borrower – they add up all installments that are paid monthly, even those for a smartphone. Banks can also analyze household expenses that will have to be incurred. These are sums that are paid monthly and which have a decisive place in the household budget. The next issue is of course the credit history and the last element taken into account is the type of loan applied for. The less risky the loan and the lower the amount, the better the chance for a positive decision by the bank.
How do you calculate your creditworthiness?
You can assess your creditworthiness yourself. Just how to do it? A lot depends on what credit you want to take out. Fortunately, you can find numerous credit calculators online to help you check your credit options for both cash loans and, for example, mortgages. Enter all required data, including the loan period, loan amount, net monthly income and expenses in the appropriate boxes. The result does not mean, however, that the selected bank will definitely give someone a loan. However, this is the basis for making efforts. It is best to visit a bank branch, call a consultant, or complete an online loan application. Then only the decision is awaited.
How to increase your credit standing?
There are ways to increase your credit standing. It is worth taking such actions if you think of taking a loan in the near or distant future. First of all, you have to pay off other obligations, if they are pregnant and gain stable work, which is a source of good income. It is the continuity of employment that counts, so with possible higher loan amounts, it is worth working in one place for at least a year or two, while gaining the best possible contract. Customers who are behind with the repayment of other loans should pay them first, because it is very difficult to get a loan for those in debt.
It is also worth limiting your monthly maintenance costs – if this is possible of course. If you have unused credit cards, it’s better to opt out. Even if you didn’t pick a penny from them, the bank treats them as a potential source of the loan and counts them as a financial burden on the person. On the other hand, regularly paid liabilities testify to the credibility of the customer. Account debit limits work similarly. By following these tips, you can improve your credit standing and get your dream loan!