By going to the bank with a loan application, we always hope that it will be accepted, quickly considered and the credit decision will be positive for us. As it is easy to guess, it is not quite so colorful and banks often reject our applications. Several factors affect this. However, the most important is creditworthiness, thanks to which the banks can determine whether we will be good clients and whether we will repay the debt within the deadlines set in the loan agreement. Credit credibility is determined on the basis of several factors, the most important of which is our creditworthiness and credit history. We must do everything to make it as good as possible, which will increase the likelihood that our application will have positive decisions. Below are some tips that will make our creditworthiness better and banks will borrow money more willingly.
- Close unused credit cards and limits
We need to be aware of the fact that, having credit cards and not using them, we lower our creditworthiness. And all because banks have to take into account the fact that we can use them at any time, which will result in the emergence of additional credit obligations. The same is true when it comes to debits or limits on the account. So if we do not use them, it is better to abandon them, thanks to which our creditworthiness will improve significantly.
- Do not submit several loan applications in a short time.
When we are going to apply for a loan, we do not submit applications to many banks. For all such applications are visible in the Credit Information Base and the banks have knowledge about them. This significantly reduces our scoring score and adversely affects our creditworthiness. Therefore, if we are not sure in which bank we will get a loan, it is worth choosing 2-3 to which we will submit the application and only go to them with the documents.
- Let’s avoid payday loans and bank loans
If we intend to borrow a larger amount in the bank (eg a mortgage loan), we should avoid smaller bank loans, let alone longer payday loans. Such liabilities reduce our creditworthiness, which is extremely important for the bank. If we already have some obligations, let’s try to pay them back so that our creditworthiness is better.
- Let’s build a credit history
Our credit history is extremely important for banks. These institutions can check it at the Credit Information Bureau, where all data related to our loans are processed. What is important, banks “do not like” clients who do not have such a history. That is why it is worth building it. The best are for purchases in installments or a low-limit credit card. Of course, we have to pay our liabilities on time, because only then our credit history will help us to obtain larger loans and credits.
- Avoid loan and loan guarantees
If we intend to apply for a loan in the near future, let us try to avoid guarantees of other loans. Our sureties are also visible in BIK’s reports and they are taken into account by the banks when calculating their creditworthiness. Sometimes it is difficult to refuse the request of a family member of a friend, but we should explain to him what the situation is and that he should look for another guarantor.
- Let’s look for a co-borrower
Virtually all banks give us the opportunity to take a loan together with another person. And it does not have to be a member of our family. It is important that it meets the bank’s requirements as a borrower. Therefore, he must have adequate creditworthiness and history gathered at BIK.
- Additional security
Banks look more favorably towards borrowers who can offer additional collateral. It may be a deposit, a third party guarantee or a mortgage. In such cases, we have a chance to get a loan without major problems, and secondly, we can get better terms of our loan.
Of course, these are not all ways to improve your creditworthiness. There are many of them and we can also mention the confirmation of continuity of employment, the selection of an appropriate system of debt repayment or extending the repayment period. We should also remember that a negative credit decision at one bank does not mean that we will not get a loan from another bank.