The creditworthiness or creditworthiness is the basic prerequisite when granting a loan. All credit institutions, regardless of whether this is the classic house bank or an online bank, routinely check the supposed borrower beforehand for creditworthiness when there is a credit demand. They are even legally obliged to carry out such a credit check. Sufficient creditworthiness is certified if the check shows that the repayment of the loan and the payment of the agreed interest can be ensured with sufficient certainty.
The higher the credit rating, the lower the risk of default for the bank.
But not only private borrowers are subject to such a credit check, companies that become banks themselves or even entire states are checked for their solvency either by credit agencies (e.g. Credit bureau) or by rating agencies. A credit check is also carried out in connection with contracts that involve regular costs. This applies, for example, to all insurance and mobile phone contracts. In the meantime, however, landlords are also carrying out credit checks to determine whether a potential tenant can also pay the intended rent in the long term.
According to the legal definition, the term “creditworthiness” denotes the likely property of a debtor to be able to and want to fulfill future payment obligations in full and on time (economic repayment ability and willingness to pay). Whether a positive borrower can be issued for a potential borrower depends on the one hand on his material and on the other hand on his personal creditworthiness.
The relevant credit bureaus and agencies,
The Credit bureau collect all relevant data about a debtor, which are summarized either as a so-called score or according to other rating systems. This credit index can be used to roughly estimate how good the person’s credit rating is. The general rule here is that a small value means good credit and a high value means less credit quality. Which values and data are exactly reflected in such a credit rating index is, however, a well-kept business secret of the credit bureaus.
Nevertheless, the consumer can find out his own credit rating and request the data collected about him from the credit bureaus. Because according to § 34 of the Federal Data Protection Act, the credit agencies are legally obliged to send the personal data to the person concerned once a year free of charge upon request. Furthermore, the consumer can point out possible incorrect entries and / or insist on their deletion.
The economic situation of each person plays an eminently important role when checking creditworthiness. This includes income, existing liabilities and employment. But the living conditions are also queried, such as living conditions (whether to rent or own a home), marital status and the existence of children.
Nowadays, however, a clean Credit bureau file has become a particularly important criterion. A negative entry will most likely result in a negative decision. However, self-employed people and freelancers are also often given negative creditworthiness, as they consider the possibility of a loan default to be very high.
Employees with a regular income who do not have a negative Credit bureau entry usually have the best chance of good creditworthiness. How the banks finally assess the creditworthiness of a potential borrower lies in the respective discount range of every credit institution.
Because there is no fixed rule or regulation that states when a debtor can be classified as creditworthy and when it cannot. Some online banks in particular have somewhat relaxed assessments of creditworthiness. They also provide people with a positive credit rating who would have no chance of getting a loan anywhere else.
It should be noted, however, that various inquiries for loans from different banks as well as corresponding loan offers are communicated to the credit bureaus, which in turn can have a corresponding negative impact on the personal credit rating index.