You are applying for your first major cash loan and are wondering what creditworthiness is actually – what does it mean and what does it depend on? I will try to explain to you what creditworthiness really is and how you can calculate it.
Creditworthiness is – simply put – your ability to repay the loan you apply for within the time limit set by the bank. Having creditworthiness is a prerequisite for getting credit at all.
Creditworthiness – what is it?
In some cases, a bank may grant a loan to a person without creditworthiness, provided that he has a realistic program to heal his financial condition or agrees to a particular type of collateral.
What determines your credit standing? Before granting you a loan, the bank will carry out a detailed analysis of two areas of your life. It will thoroughly check your income – both its stability and amount. The second is the analysis of your qualitative features.
As you can see, a good credit assessment requires a lot of information. Fortunately, if you apply for a loan at the bank where you have a personal account or other obligations (e.g. credit or credit card), your creditworthiness is calculated much faster because the bank already has much of this information about you.
Calculating creditworthiness – once you know what creditworthiness is, I still need to explain to you how you can calculate it. Each bank counts its creditworthiness in its own way. Scoring, i.e. the bank’s credit score, differs depending on the institution. It is almost impossible to calculate creditworthiness yourself, but you have other options.
First of all, you can use the creditworthiness calculator, which will quickly and easily give you the answer if you can apply for a loan of a given amount. You can go to a financial expert who will ask you a few questions and calculate your credit standing with you.
Creditworthiness and credit card limit
Credit card and creditworthiness – just having a credit card can affect your creditworthiness. The bank may ask you to provide card statements to check whether any debt you have used is being repaid in the interest-free period.
Credit card, your card limit – it also affects your creditworthiness. Even if you do not use the whole credit limit, the bank must assume that the loan can be activated at any time.
If you want to minimize the impact of your credit card on your creditworthiness, try reducing its limit. Although the safest option will, of course, be the total liquidation of your credit card or the choice of a bank that approaches the issue of calculating creditworthiness a bit more liberally.
Creditworthiness calculator – step by step
The whole operation of calculating your creditworthiness in the calculator will take you literally a few minutes. How to do it? I will lead you to step by step. On the site, you will find two calculators – to calculate creditworthiness for cash and mortgage loans.
Step 1: Prepare for yourself the basic information that you will need to correctly calculate your creditworthiness:
- it’s best if you have a loan offer before you – you need to know its amount, interest rate and repayment time,
- you will also need information on your current liabilities (limits on credit cards, installments of other loans, the sum of other liabilities),
- Information on your income will also be needed.
Step 2: Go to the Queen of Hearts credit calculator page and complete the form with all the information you need. To make things easier, you don’t have to enter amounts, but you can use pluses that increase the value of individual fields.
Step 3: Click the green calculate button. You will receive information about your total capacity. Below you will also see a recommended offer prepared for you.
As you can see, using the calculator is extremely intuitive and fast. You can freely change the given values depending on the loan conditions or your financial situation. The data you provide in the calculator will not be passed on to anyone.
How to check your credit standing – summary
Before you go to the bank for a loan offer or start calculating your creditworthiness, you should also verify your credit history at the Credit Information Bureau. It may turn out that there are obligations that you have forgotten that will effectively reduce your credibility in the eyes of the bank. Therefore, before applying for a loan, check your situation at Credit Checker and explain any irregularities.
Remember that the commitments you have (not just loans and credits) affect your creditworthiness. If you pay alimony or, for example, make constant payments for utilities, these expenses are included in the permanent obligations that you will have to provide in your application when applying for a loan.
It is worth checking your credit standing not only when applying for a cash loan, but first of all, if you are thinking about buying a flat or a house and financing your purchase with a mortgage. Thanks to this, before you start looking for your dream home, you will know what offers are within your budget.