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. Therefore, it is an indicator of the risk taken each time by a financial institution, granting us obligations in the form of a loan.
How to increase your credit standing
Meanwhile, it turns out that there are methods to increase the creditworthiness ratio.
– reduction of the requested loan amount – when analyzing the loan application, the bank assesses it considering the given value of the liability. Even a slight reduction may cause the capacity ratio to increase to the extent that funding will be possible.
– longer loan period – spreading the repayment over a longer period of time will reduce the monthly installment, and thus increase the creditworthiness.
Change in installment type
a way to reduce the installment value of a loan is to use fixed installments instead of decreasing installments. If you want to increase your creditworthiness, you should apply for repayment of the liability in fixed monthly installments.
– repayment of other liabilities – when calculating creditworthiness, the bank will take into account the ratio of monthly earnings to the amount of liabilities due, e.g. loan installments and credit card installments, even if it is not used. Therefore, the first step should be giving up your credit card and paying off other obligations.
– the right lender – first, let’s use the calculations of the bank we are the customer – he knows our history so far and can offer more favorable conditions than other credit terms. In addition, it should be noted whether the creditor, apart from the main part, also takes into account any bonus part of the remuneration.
The risk indicator associated with repayment of a loan granted in a foreign currency is much higher than that occurring with USD loans. Lenders for foreign currencies use a different algorithm for calculating creditworthiness. It may turn out that a loan not granted for US dollars can be granted in full if it is taken out and repaid in USD.
– recruiting a co -borrower – consideration may be given to including a second (or subsequent) borrower. The financial institution will take into account the amount of both (or many) remuneration and will calculate the increased capacity ratio on its basis.