The main facts about creditworthiness
- The term creditworthiness generally describes the legal permission or authorization to take out a loan or a loan.
- According to the definition, a person is a natural or legal person who can conclude legally effective loan contracts. Commercial partnerships can also be considered creditworthy.
- A person must have full legal capacity to borrow. Legal age is an important criterion for creditworthiness.
Creditworthiness – the exclusion criteria
If a person is not of legal age, he is not eligible for credit. Even people who are under care are not eligible for credit.
Some of the persons who are under the age of consent can be:
- mentally ill people (people with mental disabilities)
- People with certain physical disabilities
- People with intellectual disabilities.
The lender is obliged to carefully examine the criteria of creditworthiness for each individual interested party.
If contracts are concluded with non-creditworthy persons, they are to be regarded as void. The borrower is therefore not bound by these contracts.
Creditworthiness versus creditworthiness
Banks only issue loans if natural persons can demonstrate their legal and legal capacity. This bank review is not always easy.
Many details can be carefully controlled by the banks, such as age, but often a good belief in creditworthiness must be sufficient. Banks and credit institutions rely on the following information from customers:
- truthful statements about yourself
- the real interest of the customer to want to repay the loan together with the interest
- the truthful statement by the customer that binding liabilities can be entered into.
In contrast to creditworthiness, banks also check creditworthiness. For this purpose, the economic situation of the borrower is checked carefully on the basis of the required documents in order to be able to classify the risk.
The banks receive an insight into the customer’s payment behavior by asking Credit Bureau.
- People who are creditworthy do not necessarily have to be creditworthy. Under certain conditions, these people must also provide collateral for the granting of a home loan. Guarantees, loans on investments or higher interest rates are then requested from the customer so that he can still receive the desired loan amount. Banks are particularly skeptical of self-employed persons, single earners, especially young or older people.
Manage credit inability with a creditworthy person
If an applicant is not creditworthy, he is not eligible for a loan. There are no exceptions to this.
However, a person who is not creditworthy can ask a person with creditworthiness to sign a loan agreement. These people must then regulate the repayment among themselves.
However, the risk always remains with the creditworthy person who took out the loan for the creditworthy person. Even if the person for whom the loan was intended cannot pay, the borrower must repay the installments on time.