Creditworthiness is a concept that often comes up when talking about loans and credits.
The problem is that very few have a good understanding of what creditworthiness really is and how you can change your own credit rating. We shall try to remedy this with this article which will deal with creditworthiness.
What is a Credit Rating?
Creditworthiness is something that is determined by the credit reporting agencies and it depends on a variety of factors. Creditworthiness is a measure of your ability to repay a loan or credit and is therefore very important in a lender’s assessment of whether or not you should get a loan. If you have too bad a credit rating, it will actually be impossible to get a loan, it’s that simple.
Even if your credit rating is not at the bottom, it can be difficult to get a loan if it is not too good. But how can you go about changing your own credit rating? To understand this, we must first look at what actually affects your credit rating and what makes it difficult to get a loan.
What affects your credit rating?
As we already said, there are many different factors that affect your credit rating. Some of them include your life situation, your income and your fixed expenses. Now let’s look a little closer at these different factors.
Your life situation is your life right now. The credit rating is judged most based on how stable your life is right now. You want to see that you have long employment and have lived in the same house for a long time. This means that you will probably not make a major change to your finances in the near future.
Your income is simply the salary you receive each month. Higher pay, of course, means better credit rating as it increases your chances of actually repaying the loan or credit.
The last big factor that determines is your fixed expenses. These determine how much money you have to move with each month. Housing costs are for the most part the largest expense in this category. The credit reporting companies do some calculations on this and arrive at approximately how much money you should have to move with each month to see if you have the ability to handle the payments or not.
These are the factors that determine your credit rating but how do you actually do to change them?
How can you change your credit rating?
Changing your life situation hard and will take time. We therefore say that you should start as soon as possible in order to also be ready as soon as possible. Get a permanent job and a permanent living so you are well on your way.
Your income is easy, increase your income and you increase your credit rating. There are many tips on the internet for how to increase your income. You must reduce the fixed expenses to increase your credit rating. Maybe get a smaller accommodation or sell the car?