Creditworthiness affects how much money we can borrow from a bank or non-bank company. When our creditworthiness is high, we can count on a high loan or loan amount. If it’s low, we will not borrow so much.
The ability of the person applying for a loan or for a loan to repay the borrowed capital together with interest on a specified date is determined by the term of creditworthiness. It is examined for the majority of loans and credits requested by the client. Loan companies and banks have their own rules and methodologies for calculating creditworthiness.
The creditworthiness analysis is divided into two areas – the first is the quantitative analysis of the client’s income, the second is the qualitative analysis of the client’s characteristics. Below we present the main factors that shape creditworthiness.
Creditworthiness is affected by:
• the amount of income earned every month
• sources of income and their regularity
• current charges, for example, bills, installments, alimony
• current credit history
• customer age
• type of loan and its installments
• loan period
• the amount of own contribution
• additional security, for example, real estate
Therefore, when we are in a good financial situation and we have not had any problems with repayment in the past, our creditworthiness will be high.
You save – you borrow more
We must also indicate here that in the context of creditworthiness, the savings owned by the client are also very important. They can be considered in two ways, namely, they can be their own contribution when taking a loan or a loan, or they can be collateral when they are placed on a deposit.
The savings are mainly useful when we want to apply for a larger sum, for example, we are looking for a cash loan for a major renovation, for a housing loan or for a car loan. In such cases, we can apply own contribution or security is required, which can also be collected by the customer savings.
The bigger our own contribution, the cheaper we will be able to borrow money. It is worth pointing out that in the case of housing loans, it is now necessary to transfer to the bank its own contribution in the amount of 20% of the price of the property, so it is tens of thousands of zlotys, taking into account the high prices of premises.
What if we receive a negative decision?
As mentioned earlier, banks and loan companies have different methodologies and rules for calculating the creditworthiness of their clients. Generally, in the case of smaller loans such as payday loans or cash loans for small sums, no such high creditworthiness is required as in the case of housing loans and other loans for large sums.
If we receive a negative decision in one company, we can try to go to the other, where there is a greater likelihood that we will be able to borrow money more easily. However, when we receive a refusal everywhere, we should find the reason for it – they may be small wages or high costs or entering into the list of debtors.