18.10.2023
Your borrowing capacity and your creditworthiness determine whether you can obtain a personal loan and on what terms. Both are examined during a credit check. We explain what these terms mean and show you what is important to the assessment. We also provide answers to FAQs.
Each time you apply for credit, you as the applicant will be subject to a credit check, which is the basis for granting a consumer loan. After the check, you will find out whether you can get a consumer loan and, if so, what the conditions are. The loan amount, duration and interest rate are also determined after the check.
Whether for a new car, a move or advanced training: PostFinance, in cooperation with bob Finance, offers personal loans with fair and transparent conditions. You can apply for a PostFinance personal loan online in three simple steps.
The credit institution uses the credit check to determine the borrower’s creditworthiness: this predicts the degree of probability that the loan will be repaid to the credit institution. The credit check is a legal requirement for granting a consumer loan.
The applicant’s personal borrowing capacity is checked. This is followed by a decision on whether to offer a consumer loan.
Firstly, a person meets the creditworthiness requirements if they can legally conclude loan contracts. For example, they must be of legal age. The credit check also analyses the borrower’s financial situation: they must be able to repay the loan within the agreed term. Moreover, lending must not lead to borrowers becoming overindebted. The exact rules are set out in the Consumer Credit Act (CCA). Secondly, a creditworthy applicant is someone who is considered to be trustworthy, reliable and “willing to pay”. In other words, this is about borrowers’ expected payment behaviour. During the credit check, the credit institution determines how likely it is that the borrower will pay their invoices on time. To this end, various “risk factors” are examined.
During the credit check, the credit institution makes a budget calculation based on the information provided by the borrower and compares their expenses with their income. Expenses include:
You must be able to repay the loan, including interest, in 36 months with your monthly income or the money left over after expenses. However, the term of a loan can be from a minimum of six months to a maximum of 84 months.
When assessing creditworthiness, “risk factors” are examined to determine reliability and willingness to pay. These include:
Credit institutions use the Central Office for Credit Information (ZEK) to check creditworthiness. They also consult other sources of information such as extracts from the debt collection register and debt collection agencies.
In that situation, the consumer loan is not approved. This means that the credit institution cannot pay out the requested amount. Every rejected loan application is recorded at the Central Office for Credit Information (ZEK), where it can be consulted for two years. This has a negative effect on your next loan application. You should therefore not apply for a consumer loan if your chances of success are not good. For a realistic self-assessment, it is advisable to carry out a budget check yourself before applying for a loan.
Yes. A loan for private individuals is also called a consumer loan, because in most cases the money is used for consumer goods.
Yes. The borrower’s creditworthiness is examined during the credit check. The check determines whether you can get a personal loan and what the terms are. Your creditworthiness provides information on the likelihood of you being able to repay the loan within the agreed term. You can also check your creditworthiness yourself.
Would you like to know how you can improve your creditworthiness? Go to the blog article “Credit standing for private loans – what is a creditworthiness check?”
