Creditworthiness is one of the most important parameters that are taken into account when examining a loan or loan application. Individual creditworthiness calculation helps potential borrowers assess the chances of granting the funds they are applying for. This can be done using a simple tool, which is a creditworthiness calculator.
Creditworthiness and creditworthiness – arrangement of terms
To start with, it should be emphasized that financial institutions, when granting loans or borrowings, take into account both the creditworthiness and creditworthiness of the consumer. These are obviously not the same concepts. Creditworthiness refers to the consumer’s past financial obligations, and more specifically whether they were reliably repaid and whether they were incurred at all. To find out, financial institutions rely on data provided by entities such as the Credit Information Bureau, Economic Information Bureau and the National Register of Debtors. The BIK report is usually the basis here.
What is credit standing? Pursuant to the Banking Act, it is: “the ability to repay the contracted liability together with interest on the dates specified in the contract”.
What affects creditworthiness?
The creditworthiness is influenced by a number of factors that strictly apply to the borrower’s financial standing. The calculation of creditworthiness refers primarily to:
- employment and its forms,
- the amount of income,
- the amount of expenses and other obligations that are also related to the borrower’s family situation.
Simulation of creditworthiness, which is carried out by a detailed calculator, allows not only to answer the question: do I have creditworthiness. It will also help you check what credit I will get, i.e. how much funds I can apply for. But keep in mind that this is a helpful simulation, not the final result.
Examine your credit standing – use the online calculator
How do you check your credit standing using the calculator? What data should be prepared? First of all, it is data on the individual financial situation. Secondly, these are the parameters of the loan we want to apply for. The example we use concerns the creditworthiness of individuals – slightly different parameters are used for companies.
Calculate creditworthiness – loan calculations
The creditworthiness calculator calculates the individual creditworthiness based on the following data:
- monthly income – enter the value of net income,
- monthly commitments of a permanent nature – these are costs related to the monthly maintenance of the household,
- credit obligations – is the value of monthly expenses for credits and loans already incurred and repaid,
- credit cards – the value we enter is the limit granted as part of the credit card,
- number of household / family members.
The next step is entering credit parameters:
- annual interest rate – this may be the average market value of the loan interest rate,
- time to repay the loan,
- type of installments – here we usually have a choice of increasing or decreasing installments.