But when the bank adviser nods in answer to our question about credit, we frantically wonder what can be done. First, ask yourself, what is credit standing? The easiest way to say is that it is an assessment of our financial situation that will allow us to determine the possibility of receiving a loan, as well as determine what amount it will be a loan, for how long and in which currency. http://pangu.us/our-tips-are-available-to-those-who-wish-to-learn-how-to-handle-their-own-finances/ for an assessment
In order for the bank to thoroughly assess our capabilities, customers submit a number of verifications after submitting documents – analyzes – which are divided into legal, technical and financial. And it is a financial analysis that judges our creditworthiness.
All banks have their own method of calculating creditworthiness
And it depends mainly on the profile of the client to whom they want to grant a loan. To put it simply, not every customer in all banks will receive a loan. However, each bank pays attention to the same when determining creditworthiness – that is, our income and monthly costs associated with maintenance, as well as with loans that we already repay.
As you can guess, other forms of debt are important for our creditworthiness. So if we even have a small cash loan (e.g. for RTV or household appliances, photo equipment, renovation, etc.), it negatively affects our credit standing. Therefore, it is worth trying to repay all liabilities or, in the absence of such a possibility, withhold your mortgage until all cash loans have been repaid.
It is also important whether we have already taken out such a loan or if we simply have the opportunity mainly through various types of cards. Credit card and debit card is a factor that has a very negative impact on our credit standing. Card sellers know very well how easy it is for us to pay with plastic money and automatically enter into a financial commitment to banks.
To sum up – the best situation is when we don’t have any other financial obligations on the day of applying for a loan, i.e. credit cards, account limits, and other loans. If we already have such funds and we do not have the funds to pay them back, it is worth considering extending the repayment period or consolidating liabilities into one, which will definitely improve our situation.
What should you do first to improve your credit standing?
Education is also important – people with higher education are in the eyes of the bank predisposed to occupy better-paid positions and thus have hypothetical greater freedom in repayment of installments. So if we work and are at the end of studies – sometimes it is worth waiting until we can boast a diploma.
However, the most important factor determining how much credit we can get is the value of our income. In addition to the obvious impact, which is the impact of their amount on the value of the loan, our seniority is also important. 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 may consider that our income is not yet stabilized, which raises the possibility of loss. The company’s history itself is important – even if we were a dream employee for the employer, and the company fails or we lose our jobs ourselves – the bank has the same problem.
That is why companies with a stable market position are perceived better than those with the date of entry in the records from a month ago. A very important element is also the type of employment contract that connects us with the employer: contracts – orders are poorly perceived. So it would be good to negotiate an employment contract with your employer.
Undoubtedly, spreading the credit burden on your wife or husband increases your credit chances. However, it is worth remembering that the second borrower should also have some solid income. Only then will the bank decide that our co-borrower will help us with any problems.
If the other person does not contribute financially
the effect can be quite the opposite – the bank will recognize that our financial burden is greater due to maintaining the spouse. The above is also related to the size factor of the family – the more dependent children we have, the (which is unfortunately obvious) the bank decides that we need to spend more funds on life and less on credit.
If we already have any loans, the bank will carefully check how we are paying them back. The regularity of paying installments testifies to our financial responsibility and for banking, analyst means that, despite some financial burden, we are dealing with it exemplary.
Banks’ lending policy is like a flag in the wind. Not only is it changing quickly under the influence of market impulses, often the 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 passes us off smoothly, it does not mean that we will not succeed in another. What’s more, the same bank one month may think that we will get a loan without a problem, but after a few weeks will inform us that we have no chance for a loan.