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CREDITWORTHINESS

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Creditworthiness is how a lender determines that you will default on your debt obligations, or how worthy you are to receive new credit. Your creditworthiness is what creditors look at before they approve any new credit to you.

Creditworthiness is determined by several factors including your repayment history and credit score. Some lending institutions also consider available assets and the number of liabilities you have when they determine the probability of default.

Creditworthiness is how a lender will tell if you will default on your debt obligations.

Creditworthiness is determined by several factors including your repayment history and credit score.

Improving or maintaining your creditworthiness is as simple as making your payments on time.

Understanding Creditworthiness

Your creditworthiness tells a creditor just how suitable you are for that loan or credit card application you filled out. The decision the company makes is based on how you’ve dealt with credit in the past. In order to do this, they look at several different factors: your overall credit reportcredit score, and payment history.

Your creditworthiness is also measured by your credit score, which measures you on a numerical scale based on your credit report. A high credit score means your creditworthiness is high. Conversely, low creditworthiness stems from a lower credit score.

Payment history also plays a key role in determining your creditworthiness. Lenders don’t generally extend credit to someone whose history demonstrates late payments, missed payments, and overall financial irresponsibility. If you’ve been up-to-date with all your payments, the payment history on your credit report should reflect that and you should have nothing to worry about. Payment history counts for 35% of your credit score, so it’s a good idea to stay in check, even if you have to just make the minimum payment.

Your creditworthiness is important because it will determine whether you get that car loan or that new credit card. But that’s not all. The more creditworthy you are, the better it is for you in the long run because it normally means better interest rates, fewer fees, and better terms and conditions on a credit card or loan, which means more money in your pocket. It also affects employment eligibility, insurance premiums, business funding, and professional certifications or licenses.