As a credit-active individual you must be clear about your credit standing, giving you control over financial standing.
Before applying for a home loan, Nicky has to be clear about her creditworthiness.
With a low credit score, you aren’t likely to get positive results from applications. She need to get access to all of the tools that will give her insight into how much she needs to improve.
Creditworthiness is an assessment of how likely a customer is to repay a debt, based on the amount of income they have as well as what they are paying off. It is determined in different ways such as by using the 5 Cs of credit.
It also gives insight into how well she has handled her previous credit agreements. Using tools such as credit reports and scores, it can easily be determined.
As a customer, there are ways to determine creditworthiness before applying.
How to determine creditworthiness as a customer:
Analysing:
- Debt payments
- Inflows and outflows of cash
- Recent inquiries
- Profitability trends
- Details of income
- Levels of credit utilisation
- How debts have been paid off
- How long one has had credit
- Frequency of applications for credit
Nicky should get hold of her credit report. It outlines how quickly she pays her loans off and her employment details. It offers a sign of how creditworthy you are considered.
Nicky would benefit from taking an honest look at her current finances. This will help her work out if she can afford to repay debts or not. If her affordability is low, chances are that this is directly proportional to creditworthiness.