Work On Your Creditworthiness

"Work On Your Creditworthiness"


the extent to which a person or company is considered suitable to receive financial credit, often based on their reliability in paying money back in the past.

When thinking of availing yourself of a loan, a number of factors come into play that affects your eligibility to be approved or not. One of these factors is creditworthiness.

Creditworthiness is an important assessment indicator that determines whether you will likely default on your debt obligations or not. It is important to establish your creditworthiness as this is used to gauge your ability to meet your loan repayments on time.

Who is creditworthy?

Being creditworthy means an individual is fit to get approved for credit. What makes an individual suitable is their dependability in having paid back money for the personal loan they have acquired in the past.

Below are the factors that determine creditworthiness:

1. Individuals who are creditworthy have a good history of paying off debts in a timely manner.

2. Creditworthy individuals have an outstanding ability to manage their debts.

3. Individuals who have demonstrated their creditworthiness can be considered as “good risks”.

Lenders combine creditworthiness with other factors to assess your overall risk.

Other factors that determine your eligibility for a loan

Lenders check for the following as well to determine your high acceptance rate loan eligibility:

1. Credit history

Your credit file is assessed to check your credit standing. Your file summarises all your applications for loans or credit cards, as well as your loan and credit card inquiries. A copy of your credit file can be acquired from these credit reporting agencies: Experian Australia, Dun & Bradstreet, or Veda Advantage.

2. Income and expenditure

You will be asked to prove that you are earning steadily, which is why documents proving that you have a steady source of regular income will be required.

To see if you can handle your debts, you will also be asked for a list of your expenses. This is to determine if you can pay off your loans on the income you have and the expenditures you also have to manage.

Whilst many factors are considered to assess your loan eligibility, it is important to keep in mind creditworthiness as essential in determining your suitability. Being creditworthy is not merely a determining factor but also a helpful tool to assess yourself if you are indeed capable of handling another debt.

At the end of the day, you don’t want to be burdened even more with financial challenges, which is why lenders use creditworthiness to also help customers to be more financially responsible. They don’t want their clients to avail themselves of a loan that they can’t even afford to pay off.

Speaking of improving your credit, perhaps you need to borrow money but your credit hasn’t improved enough to get one. In such cases, it may be beneficial to apply for a no credit check loan. Discover more about this type of loan here at Perfect Payday.

About the Author

Lucy has over a decade of experience in finance. She is currently the content curator here at Perfect Payday.

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