In almost all cases in which you want to borrow money from a lender, the bank will check your creditworthiness beforehand. Your credit rating expresses your solvency – for example, you can see if and how quickly you can repay your loan. Even if you apply for a credit card or want to lease a new car, your credit rating plays an important role.
Before a lender concludes a contract with you, he or she informs you in detail about your previous payment behavior. From the credit check, he concludes how big the risk is that you will repay a loan granted by him or not on time.
Credit check: what information is used in creditworthiness?
Thus, the credit check is a security for the provider who could lend you money.
If the risk is small according to the check that the borrower does not pay his debts or does not settle them on time, the lender can consider a loan.
During a credit check, credit institutions check personal data such as your name, age, gender and address – however, the focus is on your previous payment behavior. All information about this is stored in Switzerland by the Central Office for Credit Information.
Good Credit saves a person’s existing payment obligations as well as credit transactions that have already ended – rejected credit applications and credit card balances are also displayed. Depending on the type of entry, these are sometimes saved over several years. You can find out more about Good Credit’s retention periods here.
How do I find out what my credit rating is?
Of course, not only potential lenders can find out about you and your payment behavior with a credit check – you can also request your excerpt from the register. This is how you can get an overview of your current creditworthiness – easily online on the Good Credit website.
In the next section, you will learn how to correctly interpret the results of the credit check.
How does the credit check affect a loan?
A lender can use the credit check to minimize his risk – but this can never be completely ruled out. Good Credit codes 04, 05, 22 and 23 counts as very negative for your loan request. A Good Credit block also prevents a loan from being granted.
However, not every entry at Good Credit inevitably leads to a negative credit decision. If the codes 02 or 03 are stored – These stand for a rejected loan application in the past or for slow payments, then there are credit institutions that still grant loans in this case.
However, if there are multiple entries, this can reduce your chances of making a positive credit decision.
If you are granted a loan in spite of isolated negative information in the Good Credit, worse conditions are to be expected. The interest rate, in particular, is determined according to the creditworthiness and the entries.