FINANCIAL CREDITWORTHINESS
Many of us lately would have come across the term CREDIT WORTHINESS. Especially while applying for any type of Loan in the last few years. What is CREDIT WORTHINESS and how does it impact our access to credit from financial institutions, both Banking and Non-Banking companies alike?
Credit Worthiness can largely be defined as our probability of getting a loan or not getting a loan from a Banking or Non-Baking financial company. It can also be interpreted as, if we are reliable or credible to be given a loan by the lender.
What is Credit Worthiness?
Broadly interpreting, it is the reputation, the lender has in its eye about the loan applicant by quantifying his/her effectiveness in terms of managing obligations towards various financial institutions. What are the factors impacting our Credit Worthiness,
- Paid Financial liabilities
- Unpaid Financial liabilities
- Existing Credit history
- Non-Existing Credit history
Basis the above factors, Lending institutions determine to issue or not to issue a loan. Additional factors considered are,
- Income
- Assets accumulated
- Type of employment
- Count of dependents
Basis the above cumulative factors if Lending institutions decline your loan request, it basically indicates your low Credit Worthiness. This should then be something you should work on, to ensure going forward you have access to effective credit by improving your Credit Worthiness.
