This term should be understood as the borrower’s ability to repay the loan. Before a bank decides to transfer a certain amount of money to someone else for use, it first examines its creditworthiness, i.e. determines whether the potential borrower can afford a loan. What constitutes creditworthiness?
What constitutes creditworthiness
One of the elements of creditworthiness is the financial situation of the borrower, which is affected by a number of factors. First of all, the bank will be interested in our income. It concerns both their amount and source, e.g. employment contract, mandate contract, retirement, disability pension, income from rent or lease. Many people think that the concept of financial situation is only our income.
However, this is not true. Secondly, the bank will ask you how much are fixed monthly fees, such as rent for the flat, utility costs, car fuel, car depreciation costs, telephone charges, etc. Thirdly, we will need to provide information on our current financial obligations and their height. Liabilities are primarily loans, loans, debt on credit cards, etc. Which may come as a surprise to some. Included in this category is the maintenance liability.
All this information is intended to compare our income and expenses. In this way, the bank is able to easily determine if we still have any money left that can be used to repay loan installments.
When examining our creditworthiness, the bank is also required to verify us at the Credit Information Bureau. Regardless of the type and amount of the liability, the bank must check our history in BIK.
From there, we will find out not only whether we have paid all our obligations, but also whether we have paid individual installments on time. It is also a chance for the bank to check whether we are reliable customers and whether we are fulfilling the concluded contract.
What else constitutes creditworthiness? It is certainly important how many members our household counts. First of all, the bank will be interested in how many people we support.
Apart from fixed fees, which practically do not change, regardless of the number of people. The amount of many expenses depends on the number of family members. As a rule, the more people, the higher the costs.