The moment is coming in our lives: – we take a mortgage. And then we start estimating our chances. But when the bank’s adviser nods in response to our credit question, we are frantically wondering what to do.
First, ask yourself what is creditworthiness? Well, it is easiest to say that this is an assessment of our financial situation, which will allow us to decide on the possibility of receiving a loan, as well as to determine the amount of the loan, for how long and in what currency.
Improve your creditworthiness
In order for the bank to assess our capabilities accurately, after submitting documents, the clients go through a series of verifications – the so-called analyzes – which are divided into legal, technical and financial. And it is the financial analysis that determines what creditworthiness we have.
All banks have their own way of calculating creditworthiness and this is largely dependent on the profile of the client they want to give credit to – simplifying not every client in all banks will receive a loan. However, each bank pays attention to the same when determining the creditworthiness – that is, our income and monthly costs associated with maintenance, as well as with the loans we already have.
As it is easy to guess, other forms of debt are important for our creditworthiness. So if we have, even a small cash loan (eg for RTV or household appliances, photographic equipment, repairs, etc.) has a negative impact on our credit facilities. It is worth trying to pay off any liabilities, or in the absence of such a possibility to suspend your mortgage until all cash loans are repaid.
It is also important whether we already have such a loan or if we simply have such a possibility mainly through various types of cards. The credit card and debit card is a factor that has a very negative impact on our creditworthiness.
Card sellers know very well how easy it is for us to pay with plastic money and automatically enter into the ratio of financial obligations to banks.
Therefore, we are “happy” holders of these cards and we decide to go to a bank that encouraged us, but unfortunately even this bank looks askance at the cards sold to us! This paradoxical situation is proof that we would always be aware that the bank wants to make a profit in the first place, and in the second one (by the way) help us to buy a flat.
Therefore, let us try to eliminate all plastic debt money – regardless of whether this debt is in fact or is it possible. Even if we do not use our debt financial reserve with a credit or debit card – the bank recognizes that the possibility of indebtedness itself has the same meaning as if it actually occurred. After all, no bank wants its client to decide which installment to repay and which not.
To sum up – the best situation is then when, on the day of applying for a loan, we do not have any other financial obligations – ie credit cards, account limits, other loan installments. If we already have one and we do not have the resources to pay it back, it is worth considering the extension of the repayment period or consolidating the liabilities into one which will certainly improve our situation.
What to do first to improve your creditworthiness?
- Close bills with credit or debit cards
- Merging several credits already taken into one
- Negotiate a longer repayment period for existing loans
- Try to get a co-borrower (creditworthy)
It’s harder for yourself
Education is also important – people with higher education are in the eyes of the bank predisposed to occupy better-paid positions and thus having hypothetical greater freedom in the possible repayment of installments. So if we work and we are at the finish of our studies – sometimes it is worth waiting until we can boast a diploma.
The most important factor determining how much credit we can get is the value of our revenues. Apart from the obvious translation, which is the impact of their amount on the value of the loan, our seniority also matters. It is also important whether we work in one place for a long time. If our internship in the current company is short, the bank also had some fixed income. Only then can it recognize that our income is not yet stabilized, which creates the possibility of losing them.
If we already have some loans, the bank will scrupulously check how we pay them back. Regularity of paying off the installments proves our financial responsibility and for the banking analyst means that despite the fact that we have a financial burden, we deal with it exemplary.
Knock on many doors
The credit policy of banks is like a flag in the wind. Not only is it changing rapidly under the influence of market impulses, often decisions of “mother banks” located in other countries have an additional important and sometimes decisive influence. As a result of this high volatility, it is worth remembering that even if a given bank transfers us with a receipt it does not mean that we will fail in another.
What’s more, the same bank one month may consider that we will get the loan without any problems, but after a few weeks, we will inform you that we can not afford a housing loan. We are necessarily doomed to many approaches at the same time, or using a loan broker.