Before a bank customer receives a loan, their creditworthiness is checked. This usually happens after an application has been made to his bank adviser. The customer himself agrees that the bank may query his credit bureau and confirms that all financial circumstances are disclosed. Only then can a bank judge whether the awarding of the loan is secure. Thus, the creditworthiness is actually closely related to credit bureau, where debt and installment arrangements are reported.
Which factors fall into the creditworthiness?
Before anyone is declared creditworthy, his previous business must be scrutinized. Of course, this is not about which car the borrower drives, whether he refuels the expensive or cheap fuel or whether the customer buys organic products or decides on normal food. It merely checks whether the borrower has ever had unpaid loans in his past. So debts and debts can still be open, which can lead to a rejection. In the event of bankruptcy, these creditors would be served first – too high a risk for the bank.
The creditworthiness has nothing to do with how many ongoing contracts a customer already has. Rather, it is important whether the customer keeps the contracts on an ongoing basis and whether he can afford another. It also has to be tracked whether the customer leads a rather lavish lifestyle or whether he repeatedly transfers a portion to his savings account.
In addition to all these factors, the creditworthiness also includes very personal data, which is required in a loan agreement. For example, owning an identity card is a must, a permanent residence and, of course, possession of an account. Most also require regular income and include data such as age, place of origin, and place of residence in their decision on creditworthiness. In addition to a regular income, the type of employment contract is not least crucial, because permanent employment contracts also protect the bank.
Improve your creditworthiness – is this possible?
Yes, if you want to be creditworthy, you have a few options. For example, a savings plan could help to create reserves and thus collateral. In addition, one could pay more attention to whether the monthly expenses could be reduced. Maybe there is a guarantor or other valuables that would serve the bank as collateral.
Whether the bank classifies someone as creditworthy or not, is often also individual and not clearly laid down. Partly banks give out of the gut feeling no credit, even if otherwise would speak much for the creditworthiness. Of course this is allowed, because the bank is not obliged to do anything.