Sooner or later most of us need to take out a loan or at least get the opportunity to use bank money when needed – e.g. in the form of a credit line (popular debit) or credit card. Buying a car or a house… All this may require external financing. How can a bank not refuse this funding? And that he would grant it on favorable terms? Let’s find out how to build credit.
Creditworthiness – what does the bank take into account?
Although each bank has its own rules for calculating creditworthiness, the following data are usually considered as additional information:
- Marital status – it is usually easier to take a loan for a marriage than for singles.
- Education – the higher, the better.
- Professional status – do you work in a large, reliable company or do we run our own business? In the case of business – the longer the company’s history, the better your chances of a loan.
- Regularity of income – employees on a contract of employment are a much more attractive group of clients for the bank than persons employed on other terms. Due to the irregular income of people employed under a mandate contract or a specific task contract, banks apply a much more restrictive policy for granting loans.
- Credit history – the bank checks whether we have regularly paid our liabilities. If in the past you had problems with paying financial obligations, you must take into account the refusal to grant a loan or extending the process of granting a loan.
- The number of people in the household – the lower the costs of maintaining a family, the more willingly the bank will grant you a loan.
- The type and value of the real estate being credited as well as the status of the investment. For a bank, it is far less risky to finance a finished apartment than the proverbial “hole in the ground”.
How to increase your credit standing?
Analyze your finances
This is the first step to improving creditworthiness. Calculate your income accurately (consider only those that you can document) as well as your commitments. In the case of the latter, write down all permanent charges arising from credit cards, loans, installment purchases as well as bills.
An analysis of this data will show you what has the biggest impact on your poor credit standing – maybe it will be too low income, or maybe too high spending.
Take care of your bank account history
This is particularly important if you apply for a loan at the same bank where you have your personal account. The bank will carefully look at its history, so make sure that it is regularly influenced by your remuneration and never allow the balance to be “zeroed” or overdraft.
Accumulate savings as a student
Raising capital is the best way to reduce your final mortgage cost. From this year, the amount of own contribution may not be lower than 20% of the value of the property. It is known, however, that the higher the amount, the better. It does not matter, therefore, whether you save the money you put in or put your money in your bank account. What counts is regularity.