Creditworthiness, how to check it, how to calculate

Creditworthiness, many of our clients repeatedly ask us how to calculate it. What can their maximum crediting level be? What is DTI that is used by banks. We will try to briefly clarify some basic issues regarding creditworthiness.

Creditworthiness – borrowers’ level of awareness

Creditworthiness - borrowers

People are a nation that uses loans relatively often. Most people aged 25-60 have at least one credit product. The most common are mortgage loans and credit cards. With so much crediting of people , one can also notice an amazingly low awareness of this topic. Few people know what creditworthiness, APRC or total loan repayment is.

Creditworthiness, what is it?

The discussed creditworthiness is nothing more than the ability to take another loan. It determines the maximum amount available to the customer. The simplest conversion factor is 50% capacity. The ratio of income to paid installment (DTI debt to income) allows you to clearly calculate what the maximum installment with current income can have a customer. However, this is not so simple.

What the DTI indicator will depend on the level of the client, his scoring or scoring by the bank. In the case of the worst customers who have arrears on loans, they have non-bank DTI obligations can be around 30%. This means that if a customer earns USD 2,000, the maximum installment he can have is USD 600. For the best customers, paying everything on time, with good employment DTI is usually 60-65%.

Creditworthiness and customer scoring

Creditworthiness and customer scoring

Determining creditworthiness is also very much influenced by scoring. This score affects the level of customer credibility in the bank. The more scoring points, the better the client’s score. An improvement in the ratio is guaranteed by regular loan repayment, no inquiries and its backlog deterioration, numerous inquiries. Each bank calculates the customer’s score differently. Its level is influenced by such things declared by us as:

  • Marital status
  • Occupation
  • Work (frequency of changes, length of contracts)
  • Education
  • Real estate status (ownership, rent, residence with a family)
  • Number of dependents

It is important to check your credit standing using public credit calculators, not inquiries at banks. When asking banks about the possibility of calculating their creditworthiness, banks ask us in BIK, which negatively affects our scoring.

Credit check

Credit check

In order to calculate your current creditworthiness, it is best to contact a specialist who will take into account all relevant factors in these calculations. There are several reliable companies whose advisors will certainly accurately estimate the customer’s credit capacity.. The broker or credit advisor does not make unnecessary queries in the BIK to the client, which means that the calculation of the capacity takes place without consequences. In addition, he is a specialist who knows the offers of banks, knows which banks include payday loans and loans as creditworthiness and which do not.

Calculation of creditworthiness

Calculation of creditworthiness

This treatment seems a bit complex because there is no single pattern. Each bank will calculate our capacity in a completely different way and each will have a different loan amount to offer. The most general rules for calculating creditworthiness could be as follows:

  1. Determining the amount of income of people taking a loan. If one person applies, we only consider his remuneration. The income or installments of other household members do not matter. We only consider confirmed income. Work in the dark will not be accepted by banks. A loan broker will help determine what bank will accept our income if it is a form of periodic contract with the employer.
  2. Determining the cost of living, both your own and the family’s. The declared number of children significantly affects the calculation of ability. The bank calculates the scoring based on such facts. Everyone gives an understated amount, no less remember that banks have an expenditure framework for the respective families, 2 or 3 children.
  3. Adding up all current loan and loan installments. When talking to an advisor on this topic, it is worth separating bank loan installments from those from the non-banking sector. You should also remember about your credit card balances and limits.
  4. Subtracting all maintenance costs from your monthly income should result in a picture of our creditworthiness. Of course, while maintaining the previously used concept of DTI, not exceeding 60%.

The schemes for calculating your creditworthiness are quite difficult. We encourage you to contact an adviser who will help us in this action. Professionally calculated creditworthiness will help us avoid disappointments in later visits to banks.