How to calculate your creditworthiness

When deciding on any loan, we all certainly met with the definition of creditworthiness. For some, it is known to others, it is something they have no idea about. In banking, creditworthiness is nothing more than simply assessing the financial credibility of the person applying for a loan. To put it simply, it is the ability of the person taking the loan to repay it with interest within the period specified in the contract. Creditworthiness assessments are made by banks on the basis of documents and all kinds of information they receive from applicants. These documents are varied and depend on the type of loan taken out. Banking laws specify exactly how this assessment should be carried out. Banks develop various methods on their own

Credit assessment

Credit assessment

In order to check and verify whether the borrower will be able to pay the loan, the bank checks the monthly household income, the number of persons in a given household and the monthly household budget which includes bills, water, energy, telephone, fuel, clothes, food and many others. The bank calculates the entire remaining amount of free funds that can be used to repay the loan. To check the credibility of the client, the timeliness of repayment of previous debts or liabilities is also examined. Another factor which the bank takes into account is the record factor, i.e. the borrower’s age, education, occupation, continuity of employment and even place of residence.

What is taken into account when calculating creditworthiness

What is taken into account when calculating creditworthiness

When deciding on a cash loan, remember that creditworthiness is calculated separately for each type of loan. The possibilities are examined in relation to the amount, currency, loan period, interest rate as well as its nature, then also to the amount of repaid installments and whether the installments are equal or decreasing. In some cases it may turn out that we can afford a given loan but only repaid in equal installments. The analysis and assessment of creditworthiness is carried out only on the basis of the application submitted by the potential borrower and the documents attached to it.

Credit calculator

The analysis of our creditworthiness determines what credit we are able to get, the amount of installments, the repayment period as well as the type of repaid installments. Before we decide to apply for a cash loan, we can do this simulation ourselves by using the creditworthiness calculator. This type of tool will tell the potential borrower what the bank can expect from us. Based on the entered data that the calculator will require from us, we can initially estimate your creditworthiness in the way that the bank will require from us.

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