What is creditworthiness?

What is creditworthiness?

In connection with a possible borrowing, the term creditworthiness is used again and again in practice. In fact, banks have to pay attention to a few points before granting a loan, which includes not only creditworthiness but also this creditworthiness. However, these two terms in particular must be differentiated from each other since creditworthiness and creditworthiness have different characteristics.

Creditworthiness as a mandatory prerequisite for lending

Creditworthiness as a mandatory prerequisite for lending

Creditworthiness is a so-called hard factor that practically no bank can avoid that wants to grant a loan. By law, creditworthiness is a mandatory prerequisite for the customer to be able to take out a loan at all. What is meant by creditworthiness in particular is that the applicant must be of legal age and therefore also fully or fully legally competent. This in turn means that minors are not creditworthy and therefore the bank cannot provide a loan. There are only a few exceptions to this, and in the case of a loan to minors, both the legal guardians and the guardianship court must agree to practically cure the lack of lack of creditworthiness.

By creditworthiness is meant the customer’s creditworthiness

By creditworthiness is meant the customer

Differentiation from general creditworthiness is the concept of creditworthiness. Another name for the creditworthiness is the creditworthiness of the customer. This says something about how likely it is that the borrower will actually meet his payment obligations. In particular due to their business activities and the general terms and conditions, credit institutions in Germany are obliged to check the customer’s creditworthiness as well as their creditworthiness. This is usually done using the following data and documents:

  • Proof of income and salary certificates
  • For companies and the self-employed: balance sheets
  • Credit reports
  • Consultation with other credit agencies or banks

The creditworthiness of a customer is based in particular on two factors, namely a non-negative Credit Bureau information and a regular income, from which the loan installments can be paid later. In addition, existing assets, which can serve as collateral for the loan made available, for example, can increase the applicant’s creditworthiness and thus creditworthiness.