How credit institutions check your creditworthiness.

When you want to take out a loan, your Creditworthiness is always looked at to see if you can bear such a loan financially. Borrowing costs money and although it can sometimes be tempting and easy to borrow a certain amount, it is possible that you will run into problems with the repayment. For this reason, most credit providers use a formula to calculate and check your creditworthiness.

What is your creditworthiness?

What is your creditworthiness?


Such a check and calculation usually consists of two parts: First, an assessment at the Credit Registration Office in Tiel. This gives the credit provider insight into your borrowing behavior in the past. Any problems come to light here and if there are negative codes behind your name, that may be a reason to reject your loan. Assuming that the BKR check is passed, your capacity will be assessed. A financial capacity measurement is usually the sum of all your fixed income, with deduction of your fixed costs. The amount that remains is money as the maximum repayment amount, and as a result a lender can calculate exactly how much you can borrow.

A credit provider is free to deviate from this calculation, but this is only rare and usually for very small differences, such as; you want to borrow 50000 euros, but the calculation is 45000 as the maximum loan amount. In such a case, the provider may decide to make an exception and still grant the loan. Fixed income that is not included in the calculation may also be a reason. For example, income through shares or securities. Officially it does not belong to your income, but can be a reason for a lender to grant a higher loan than the calculation indicates.

Different credit providers use different formulas for this calculation, so even if a credit provider rejects your request for a loan, it is still very possible that another person will simply grant it to you. To get a good idea of ​​exactly how much you can borrow, it is always a good idea to request a quote from multiple credit providers, and then to select the person who can offer you the loan that you currently need.

When you apply for a loan from an approved credit provider, your creditworthiness will always be checked. This is not only a safety measure for the provider, but also for you. If you were asked to take out a loan that you cannot bear financially, you will undoubtedly end up in trouble with its repayment. Such a credit check always consists of a BKR test to chart your borrowing behavior and a financial capacity measurement, whereby your maximum repayment is calculated.

How does it work?

How does it work?


The BKR check requires the lender to perform because he is a member of this organization, but the lender is not obliged to do anything with the result of this assessment. Lenders in the Netherlands are free to ignore the results of a BKR review, even though this is not common, the possibility is certainly there. The second part of a creditworthiness check is also not entirely without obligation for credit providers, as they are obliged to stay within certain percentages with regard to the maximum amount that can be borrowed. A credit provider does have some stretch to take out a higher loan in special situations, but within reason, there are limits.

This financial capacity measurement is a calculation of your income after deduction of your fixed costs. What remains is the maximum repayment amount that you can bear financially. Various credit providers use different methods for this, and what does not count as income for one provider counts for the other. It is therefore important to request a quotation from several, if not all, providers to see which provider is best for your loan. Of course this is only important when you go for a maximum loan. You can borrow amounts below the maximum from almost any provider, provided that the BKR assessment is positive.

The type of loan also plays a major role in the amount of the loan to be borrowed, and in particular whether there is collateral or not, as this provides extra security for the lender. In any case, it is advisable to check these matters with various providers, because there are major differences between what these different providers can and want to offer you. Therefore never go ice cream overnight, but be well informed about the possibilities.

Finally, the type of credit also plays a major role in the amount. A mortgage will be higher than a personal loan simply because there is collateral with a mortgage which limits the risk for the provider.