What is the difference between credibility and creditworthiness?

Credibility and creditworthiness are concepts that every current or future borrower should know. Although many people have a general idea of ​​what these two terms express, unfortunately in a large number of cases they are considered inseparable or, worse, the same.

This is not correct thinking, because there are big differences between creditworthiness and creditworthiness. It is worth knowing them because they are of key importance in analyzing the loan application, although for the borrower they may have different effects and relate to two separate areas of life.

Creditworthiness – what is it and what does it depend on?


In other words, creditworthiness is the ability to repay an obligation. Therefore, its amount usually counts in amounts and depends on more or less complex arithmetic calculations. When calculating it, the following factors are taken into account:

  • Monthly income, type of income and its stability – the type of employment contract will be taken into account, but also the source of this income, such as pension, pension, benefits and even income from renting an apartment. In addition, your spouse’s earnings will also be included in your monthly income.
  • Expenses related to the maintenance of oneself and the family – creditworthiness includes primarily expenses related to the maintenance of the apartment (rent, utility bills) and meals. The more minors who are not income making, the less creditworthiness will be.
  • Financial liabilities to other institutions, if any, this is the so-called DTI (Debt-to-income) parameter.

This formula is quite simplified because the weight of individual components, other personal characteristics of the applicant or the safety buffer are often accepted. Sometimes, especially in the case of banks, the maximum amount of the liability is also set in relation to its earnings. Each institution adopts an individual capacity calculation formula, which unfortunately is not disclosed and depends only on the company’s internal policy – so it can change over time in line with the development of the institution and market demand.

Financial credibility, i.e. how diligent you are the borrower


Financial credibility makes it possible to assess the risk of loan default based on the applicant’s credit history, i.e. what loans or borrowings it has in the past, what liabilities it has now, how it repays them, and whether it has ever been late with repayment. Therefore, it is determined not only whether the borrower will have the means to repay the liability, but also how stable they are (GFI maintains records covering the last 5 years). Not only the repayment possibility is examined, but also the willingness to make it.

It can be said that at some point creditworthiness is connected with financial standing – the lack of repayment of a loan or credit is usually connected with the fact that the applicant does not have adequate resources for it. Similarly, it will also be the case when the borrower is listed in the debtors’ bases ) – logically speaking, since the debtor does not have money to pay debts, he will not have them to repay the loan either. This is similar for current financial commitments. They not only affect your financial credibility, but can also reduce your ability.

Loan without creditworthiness – is it possible?

Loan without creditworthiness - is it possible?

Arrears in GFI or debtor databases are not a good showcase of the applicant and he must take into account that this may result in not granting him a loan. However, it is not impossible to get a payday loan or installment loan. A loan comparison website or ranking should show at least a few loan offers, which are also available to people with bad credit history in GFI or to people in debt.

The policy of loan companies in this matter is really diverse – some companies will definitely refuse to grant a loan, while others will more or less tolerate the low credibility of their clients. Sometimes you can also note that the final terms and amount of the loan may vary depending on the applicant’s creditworthiness and creditworthiness and this is true. In such situations, lenders are less willing to grant loans of a high amount and on preferential terms.

However, if the loan is necessary and you can be sure of its repayment (because, for example, earnings allow it), it is worth looking for success in companies.

In addition, there are a number of other types of loans that you can opt for – for example, loans with a surety in Sure Money, secured loans (e.g. Good Finance) or social loans. In any case, however, you should think carefully about whether you really need funding.

High earnings are a better guarantee of getting a loan

High earnings are a better guarantee of getting a loan

High earnings can be a collateral for the repayment and a necessary requirement to receive a so-called loan without GFI. The reverse situation – i.e. relatively low earnings, but a very good payment history – will also not be an obstacle to obtaining financing. The more so that even such incomes as alimony, allowance or 500+ allowance are accepted.

Both parameters are equally important for borrowers

Both parameters are equally important for borrowers

Usually creditworthiness and creditworthiness are considered in terms of the possibility of obtaining a loan. Meanwhile, their level should be the most important determinant of security for the borrower. After all, both of these indicators may prompt the borrower not only to give up the commitment, but also to look more closely at how to manage home finances and to make sound loan decisions that are adequate to the possibilities.