Do you dream of a new car, major refurbishment of the apartment or other projects for which you want to take out a loan? Before you go to the bank to look for the best offer, check your credit standing yourself. Evaluate what credit you can count on up to.
Income is the basis for calculating your creditworthiness
The borrower’s income is the basic factor that determines the creditworthiness assessment. In the case of persons employed based on an employment contract, the bank will require a certificate from the workplace or be satisfied with the applicant’s submission of his account statement from the last few months (depending on the loan amount, it is usually 3 or 6 months).
Much more formalities await those running their own businesses. The bank will certainly ask the entrepreneur for PIT B, i.e. a form documenting the company’s revenues, costs and income in the past tax year (sometimes also in the previous year). For this you will also need data from the Revenue and Expense Book for the last few months (on this basis, the bank assesses the stability of income) as well as certificates from the tax office and ZUS about the lack of arrears to these institutions.
Expenses – a second indicator for determining creditworthiness
The applicant’s income must be compared with his expenses. Any constant charges incurred every month are taken for calculations. The most important items include:
- expenses related to housing maintenance (rent, electricity, gas, water and other charges)
- expenses related to food, clothing purchases
- credit charges (installments of other loans, limits on credit cards or in the account, etc.)
- any other fixed expenses (e.g. fuel expenses, insurance premiums, telephone or television charges).
The number of people in the household is also important. The creditworthiness of a single person is different than in a family in which both spouses earn income. In detailed calculations, banks also take into account the age of the applicant’s children, his year of birth and many other factors, to which they give different meanings, depending on the situation on the financial markets, current marketing and sales strategy.
After deducting the amount of expenses from the income amount, there remains the amount that can theoretically be used for the monthly loan installment. Importantly, you can independently influence your credit standing, reducing your expenses . A step in this direction may be reducing the limit on your credit card or completely withdrawing from it, lowering the telephone subscription or for cable or satellite television or selling a car.
The amount of credit – what credit you can afford
The next step is to calculate the maximum loan amount that you can take. It is not enough to multiply the calculated amount remaining after comparing income and expenses by the number of months during which you want to pay off the liability. It must be remembered that the monthly installment is not only the capital installment (part of the loan taken), but also interest depends on the interest rate on the loan, the bank’s margin and commission as well as various other fees (e.g. application processing fee, loan insurance etc.).
The real loan amount that you can take out is easiest to calculate using online loan calculators. Just enter the necessary data and the system will calculate the maximum loan that you can take. The more data, the more accurate, the more accurate the estimates.
The amount of the applicant’s own contribution also has a significant impact on the terms of the loan. The higher it is, the lower the bank’s risk and can apply a lower commission, opt out of credit insurance, etc.
Each time, independent calculation of creditworthiness will give only approximate values, even if we use a loan calculator that takes into account the actual interest rate on the loan in a given bank and all fees associated with it. This is because each application is considered individually, not only the creditworthiness but also the creditworthiness of the applicant is taken into account. The conditions of the loan (e.g. the amount of bank commission) that will be offered to him by the bank depend on his credit history in BIK (whether he has repaid his obligations so far in a timely manner, whether he uses a credit card or account limit). You may be interested in the article about the factors influencing the BIK score.
Help from a credit advisor
So, you can only calculate what credit order can be available to us. However, specific conditions can be found only after providing documents confirming income, verification of the applicant by the bank in BIK (you can also check your history in BIK yourself – you can read how to do it). Visiting several banks to find the best offer would take a long time and would be difficult to compare the offers received. A much better idea is to use the services of financial advisors, who follow the banks’ offers on an ongoing basis and know which financial institutions are currently offering promotional conditions. Professional advisers are also able to compare the proposals of various banks, advise in choosing the best applicant, best suited to the real situation. However, advisors can cost a lot, which is why we offer you our free help. Fill out our loan form and we’ll help you find the best loan offer.