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How the credit rating is composed? How creditworthiness affects lending

A good credit rating means that you have reliable solvency. Entries via a current account , mobile phone contracts with a term, leasing contracts, loans or mail order accounts are generally considered to be positive for your creditworthiness. They indicate that banks and companies place their trust in you and consider you creditworthy.

Creditworthiness is determined from the following personal and financial data:

  • place of residence
  • Moving frequency
  • Age
  • marital status
  • job
  • income
  • capital
  • Existing installment loans and financial obligations
  • Previous payment history

The bank or broker receives parts of this data from a credit agency such as. It collects data about your previous payment history and provides information about existing liabilities such as installment loans or debts, if any.

How creditworthiness affects lending

The higher the installment loan you want, the more important the credit check becomes. This is the only way for the bank to ensure that you are financially able to pay back your installment loan. This means: the better your credit rating, the higher the amount that you can use to take out an installment loan.

Conversely, this of course also means that your chances of getting an installment loan with a bad credit rating with, for example, several installment loans with a low income are smaller. The lending guidelines of the individual banks are very different. It is all the more important to compare as many providers as possible. This is the only way to get an overview and the best offer for you.

How can I improve my credit rating?

Fortunately, you are in control of your creditworthiness. With our tips you can improve and optimize your credit rating:

  • Don’t get more than two credit cards. Otherwise, you might get the impression that you have financial problems.
  • Remain loyal to a bank and limit yourself to one business and one personal account.
  • Don’t let contracts continue even though you no longer need them.
  • Always pay your bills immediately and don’t have reminders sent to you first.
  • It is better to agree on a somewhat more generous overdraft facility than having to exhaust or overuse a small one every month.
  • Notify creditors in good time if the payment of an outstanding invoice or installment should be delayed.

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