The financial commitment is for the average person a burden that will have to be carried for a long time. The same applies to financial institutions that will thoroughly examine the applicant’s creditworthiness before granting a loan, especially if the commitment would be really long-term. Of course, the adopted methodology for testing this ability will be quite different for an ordinary consumer credit at a bank, different for a mortgage, and another for an online loan. Nevertheless, it is good to know what may limit the consumer’s ability to repay the liability.
Loan companies usually do not pay attention to whether their client is employed under an employment contract or under a civil law contract. As it is estimated that up to 2 million Poles work on the basis of a mandate contract and a specific task contract, even banking institutions are in a way forced to adapt to the changing realities of today’s labor market. However, the instability of employment is still treated as something that disturbs the ability to pay the liability and significantly increases the risk of default. Therefore, it can often happen that the actual creditworthiness expressed in amounts can be calculated even from 80% of income.
This group also includes the type of employment contract. People whose earnings depend on the incentive remuneration system will have reduced creditworthiness. In this case, usually the solid part – the so-called base – is relatively low. On the other hand, the movable part, which includes bonuses, commissions and incentives may change, which means that usually only the base of remuneration will be calculated for the creditworthiness of the bank (but not in the case of non-bank loans).
A person achieving high income does not necessarily have to have high credit standing. This will be the lower the higher the expenses for running a household. Importantly, fixed monthly expenses are taken into account by both banks and loan institutions, although the results of the analysis will be interpreted differently. Banks assume that the fixed cost of a single-person household is around $ 1200, or 800-1000 for a multi-person household, depending on how many people actually create it. It follows that the worst situation will be families with many children, as well as people bringing up children alone.
All financial products, even if they are not used, reduce creditworthiness. The actual repayment capacity of installments includes their mere availability and use. Of course, the creditworthiness will also be affected by those obligations that have not yet been repaid – loan installments, loans, items bought in installments.
As we mentioned in the previous paragraph, any additional credit or loan will have a negative effect on creditworthiness. However, liabilities incurred in foreign currency will be an even greater burden. The reason is simple – exchange rate fluctuations are unpredictable, which may increase the monthly installment at any time. This was the case with the so-called frankowiczów. Earnings will be treated similarly, especially if the applicant would like to take out a loan in the currency in which he or she earns. It should also be taken into account that it will be practically impossible to borrow online in this case. Earnings abroad are only allowed at S-Best Credit, but only under certain conditions (see the article “Earnings abroad and a loan in a Polish company – is it possible?”).
Not only the mere existence of a liability, but also the type of repayment can reduce creditworthiness. If you choose a decreasing installment, this capacity will be reduced more than in the case of equal installments. Although it is a much cheaper solution, the initial repayment of most interest will also increase the monthly budget load.
Although the BIK score is more likely to fall under creditworthiness, i.e. the broadly understood payment culture of the applicant, it is also taken into account in calculating creditworthiness. This is due to two things: both the history of earlier repayments and the group of borrowers, which includes the applicant. On the basis of features such as age, marital status and professional profile, the average risk that a loan or borrowing entails is given to this group of borrowers.
Non-bank loans do not subject such applications to such a rigorous assessment. The reason for this is not only the reduced earnings requirements, but also the necessary speed of analyzing applications. For this reason, the algorithm for calculating creditworthiness is simplified (and different in every institution) and as long as you get a monthly salary, not necessarily with 100% regularity, it does not matter how this income is achieved. People with high loads and low income, especially if they are aiming for payday loans (requires a bit higher creditworthiness than installment loans), they can still count on the loan. In order to avoid rejection of the application, they should, however, read the terms of the grant in advance – the loan comparison tool will help.