The borrower is always carefully assessed before taking a cash loan. Why is this so important before signing a contract with the lender? Creditworthiness analysis is necessary for statutory reasons and also by limiting the risk of retail banks and loan companies. However, what is the assessment and how to prepare for it optimally? You can get some important tips through the article.
Preparation for borrower assessment
The borrower’s assessment is made on the basis of the loan application provided earlier. A very important rule applies to submitting only one application at a time to a given financial institution. Why? Each loan application generates a query to the Credit Information Bureau database. Excessive inquiries suggest that the borrower has already been rejected in several places, and this unfortunately is not conducive to establishing rational cooperation. If you do not do well with one retail bank, it is best to simply improve your creditworthiness, close your existing, even non-bank liabilities, even unpaid bills listed in the Economic Information Bureau database. This is an extremely important assumption that will speed up the credit process in the future. Important points of the borrower’s assessment are stable income and household maintenance costs. Income, preferably generated by an employment contract of indefinite duration, even a minimum one, entitles you to indebted for quite a considerable amount. Even with low income, you can set low monthly installments spread over several years, or even decades. Of course, cash loans rarely have such a long loan period. As a rule, the average loan period is 48 months, up to a maximum of five years.
A history of repayment of liabilities is similar to a positive creditworthiness
You can get additional points when applying for a loan for the history of repayment of various liabilities. If you have previously taken out cash loans or small payday loans and settled them on time, you have a better chance of obtaining favorable loan terms from various lenders. Building a debt repayment history is practically just as important as creating a positive creditworthiness. A borrower who has no repayment history at all has a very difficult start. The borrower’s assessment is required by the Consumer Credit Act or by specific guidelines of the Polish Financial Supervision Authority. This approach protects the entire credit system. No loans are given to people who cannot repay them, in short. Changing this rule leads to serious financial crises, most often on an international scale. Suffice it to mention here the crisis of 2007-2009 generated by the mortgage market (debt instruments) in the United States. Do you agree with the current conditions of the borrower’s assessment?