How is the creditworthiness checked: facts and tips!
In 2017, a total of EUR 1,192.3 billion was lent to private individuals in Germany. Compared to twenty years ago, the number has almost doubled.
Who takes up a loan , is in debt and may not be considered creditworthy.
At the latest at the next borrowing credit unworthiness can be fatal to him, because usually forgive banks in Germany only loans to creditworthy persons.
When is one creditworthy? How can the creditworthiness check be carried out? How can a person improve their creditworthiness ?
What is creditworthiness?
Credit worthiness can be used to identify a person’s ability to settle unpaid invoices and payment obligations on time and in full .
By checking creditworthiness, banks want to make sure they get the loan they have borrowed before lending . Because a loan default causes major economic damage to the banks.
How to check personal creditworthiness?
Before applying for a loan, consumers often wonder, “How creditworthy am I?” .
When checking the creditworthiness, on the one hand, the income of the borrower, on the other hand, his payment history in the past is taken into account.
Credit institutions collect personal and economic information about the borrower from credit bureaus such as the Schufa.
To calculate the creditworthiness, data about the borrower is collected and stored . Relevant are data on payment history, court and collection data and company shares .
Exactly how the creditworthiness is calculated is often incomprehensible, since the influencing factors and the algorithm used to determine the so-called credit score are subject to trade secrecy. The credit score tells you what the likelihood of a loan default is.
If the credit score is high, this means that the borrower has been reliable and dutiful in the past and thus creditworthy. On the other hand, if the score is low, it may have failed to pay on time or not at all. However, it is also possible that credit bureaus store false or outdated data about a person, resulting in a negative score. It may be possible to correct the entries.