Creditworthiness is one of the most important parameters that the bank checks before granting any loan. If our ability is small or even we don’t have it at all, we can forget about the financial support of the bank.

Fortunately, knowing whether there is creditworthiness at all and how to influence it before we go to the bank, we can prepare ourselves for it. You have to start by answering the question, what is credit standing? In the simplest terms, it is our ability to repay the commitment. Before the bank gives us any amount, it will estimate whether we will pay the installments on time.

## Calculation of creditworthiness

The answer to the question of how to calculate creditworthiness is not quite simple at all. It consists of many factors and independent calculations will not be so reliable that they show exactly the same values that will come out at the bank. However, you can use ready-made tools available on the web. We need to fill in a few headings in them, and eventually the approximate amount that we can apply for will be shown. It will also be a hint on what bank employees will focus on. Among the data necessary for calculations is the household’s net income, the number of family members, the sum of fixed expenses, the sum of monthly installments and other obligations, the time for which we want the loan and the interest rate.

If we are determined that we will apply for a loan and want more professional help and think how to check creditworthiness, we can turn to a professional financial advisor for help. He will tell us exactly what will affect our credit standing in our case. His knowledge will go far beyond a simple calculator, so we can be sure that his calculations will be more similar to those that will come out at the bank.

## When is it not worth checking your creditworthiness?

First of all, when we know that it does not look good. And this is exactly the case if our name is in the BIK debtors database. This is the first place where the bank will check us. If we are unable to meet the deadlines of existing commitments, it can be suspected that the new installments will not be repaid on time. So before we start calculating creditworthiness, let’s check the BIK.

It is also known at the outset that our creditworthiness is questionable if we do not have a stable source of income. We can talk about this situation when we work under an employment contract for less than 3 months. However, economic activity must be carried out for at least a year. Sometimes there are such paradoxical situations that a person who has income of the order of several or several thousand a month, goes from bank to bank and cannot get a loan.

## What affects creditworthiness?

When we know how to check creditworthiness, we can go a step further. Just because the calculations do not quite show what we would like does not mean that it will always remain this way. There are a number of ways to improve your credit standing. The first thing we can do is to improve the situation in BIK. Knowing that we will need bank support in the near future, it is not worth delaying. Once every six months, anyone can generate a free report about themselves. If there are any arrears or liabilities, we should settle them.

BIK also has its advantages. If we already have a loan or shopping in installments, which we always pay back on time, it is a signal for the bank that we are a reliable customer. Interestingly, the lack of any entries in the BIK works to the disadvantage. This is often a problem for young people who have never taken installments. The bank knows absolutely nothing about whether we pay back or not, so it will exercise caution. Insofar as small installment purchases (in a small amount) will favor us, credit cards, overdrafts and revolving loans, not necessarily. They show that we have a problem with maintaining liquidity and financial stability.

Another way to improve your capacity – the second borrower. If two people take the loan, for example a marriage, then the creditworthiness will be greater. This is a great security for the bank. If one person is unable to pay the installment, it can be enforced with the other person.

Consider a longer loan period. If you want to take a loan for a long time, you may find that our credit standing is much greater. Again, this is due to the bank’s security and, of course, its profit. A longer period means a higher commission, moreover, the installments will be lower, so there is a higher probability that they will be paid on time. Fixed installments are also more favorable in this respect than decreasing ones.

When you apply for a mortgage, huge money comes into play. Then you also have to take care of your creditworthiness even more. And that includes gathering more of your own contribution. Most often a minimum of 10% of the property value is required, but this involves high costs and lower capacity. It is best to immediately assume that we collect until 20% accumulates and we get much better conditions.