Your credit rating is your ability to pay off your debts, but it is not just about the ability to repay just loans and other credits, but also for example the rent. Creditworthiness is almost the same as ability to pay, but this also takes into account how you managed your previous credits and what your other financial history looks like.

The most important factors when assessing a person’s creditworthiness are your income, your fixed expenses and your life situation.

Your income

Your income

Your income is probably the single most important factor in assessing your creditworthiness and what is included here is primarily income from service and / or business activities.

Banks and landlords rarely count unemployment insurance, income from insurance, housing allowances, child allowances and other grants as income, but there are lenders in the fast-loan industry that do.

Of course, high incomes have a positive effect on creditworthiness.

Your fixed expenses

Your fixed expenses

What counts as fixed expenses depends on whether you live in a rental right or in a villa, townhouse or condominium.

  • Fixed expenses for renters: Rent, electricity and water.
  • Fixed expenses for you who live in your own home: Interest, amortization, electricity, water and home insurance plus any rent.

Children affect

If you have children, the banks usually have a lump sum for what extra fixed expenses you have for the children. Children negatively affect your credit rating.

Your loans and other credits and history

  • The amount of credit you have at the time of application also affects your credit rating as they are also included in your fixed expenses.
  • How you have managed your account credits and repayments of your previous loans is also an important factor. If you neglected your account credits and paid your repayments too late, it would adversely affect your credit rating. Even if you have many inquiries from lenders using UC it can be negative, that is why you who apply to a sms lender should choose a sms loan without UC .

Your income minus your fixed expenses is your disposable income, based on which the lender assesses your ability to pay.

Your life situation

Your life situation

How stable your life situation is is also taken into account when assessing your credit rating. A stable life situation is positive while the opposite is negative. Bertram family will give you two examples that illustrate this.

  1. Stable life situation: If you have had the same employment for many years and lived in the same home for years. If you have lived with the same partner with whom you have children and the children have moved away from home, it is also considered stable, since it is assumed that no new children are going on.
  2. Examples of unstable life situations: a) You have recently divorced and may have separated on a number of occasions before. b) You are young and have recently moved in with someone. Then the bank assumes that you may soon have children, have to buy a car, maybe buy a larger home within a few years and incur other expenses for the child.