Creditworthiness is an assessment of a person’s ability to service debt. This is important to have a good credit rating as a bad credit rating can make it difficult to get a loan or to buy goods and services on installment. It can also make it difficult to rent a place to stay or enter into a subscription agreement. You can risk losing access to basic services in everyday life such as telephony, TV or broadband.
In order to obtain most of these agreements, you have to go through a credit check. This is usually done by credit rating agencies on behalf of banks and various companies and is based on figures from public registers.
Limited loan options
If your ability to pay is considered low and the likelihood of default is high, it limits your loan options significantly. This is especially true if you have payment notes; in other words, you are registered with a debt collection, settlement, settlement, payroll or bankruptcy. If you have a payment note, you can mostly just forget about a loan, credit or subscription. Admittedly, there are loans that are granted for people with payment remarks, but then you must also expect poor interest rates. Fortunately, the payment note is deleted as soon as the case is settled or when it becomes obsolete, that is, four years after the information was registered.
Other variables form the basis of your credit rating and are summarized in a scorecard, with a score of zero to one hundred. The most important variables apart from payment remarks are age, place of residence, income and business interests. For a good score you should preferably have a stable economy without too many salary fluctuations. It also turns out bad if you move very often, get overdrafts on your account or are late with bill payments.
Know the credit rating agencies
You have the right to know what information the credit rating agencies have on you and can contact them directly. Then you can also correct any errors in the information.
Poor credit rating can also prevent you from getting a job with great financial responsibility. The employer has the right to carry out a credit check for certain job positions, such as the chief financial officer. It is therefore important to ensure that you have good credit standing.