Creditworthiness Financial situation of the borrower Credit History
Everyone talks about it
Probably many of you have heard the term creditworthiness more than once. You know perfectly well that everyone around you is saying that it’s worth taking care of her. Going to the bank for a loan first what comes up is the question of creditworthiness. However, are you sure everyone knows what it’s all about? If so, that’s very good. However, if you want to refresh this concept, here are a few words on this topic.
It is simply the ability to repay a contract. In other words, before the bank decides to give us a pool of money to use, it checks whether we can afford to pay the debt. To decide whether we can afford a loan, we use certain permanent guidelines. Therefore, whether we have creditworthiness or not consists of several factors.
What affects our credit standing
Retro or Credit Information Bureau. This is where our entire credit history is recorded. We will find all our obligations there. Those already paid off and current. The timeliness of our payments is also recorded. So if we are late with repayment of the loan installment or loan, everything will be recorded in Retro. What’s more, all applications for credit as well as refusal to grant credit will be saved there. So if you have reason to suspect that the bank will refuse to grant you a loan, please consult your credit counselor before submitting your application.
Our financial standing also influences whether we have creditworthiness or not. Most of us will now think that it is about the source and amount of our income. And he is right. However, this is only the beginning. Our financial standing, and thus also our credit standing, is also affected by how much we spend on our monthly maintenance. Therefore, the bank will be interested not only in how much money we earn, but also how much we spend, for example, on housing, car fuel, utility bills, etc. It is also important whether we currently have other credit and loans. If so, how much? Not everyone knows about it, but our obligations also include maintenance installments, if we have them awarded.
To fully examine our credit standing, there will also be questions about the family situation. The bank aims to check how many people we support. This is not surprising, because the more people the higher the costs will be.
This is the easiest way to describe what this creditworthiness is. However, you should know that it is the bank that makes the final decision on granting or refusing a loan, and testing our creditworthiness is only to help him.