When you apply for a loan, your creditworthiness will be checked. What exactly is a credit investigation? Essentially, your creditworthiness provides information as to whether you are in a position to repay the amount borrowed to the lender on schedule. The goal here is to reduce the default risk for lenders and also to prevent borrowers from becoming overindebted. A credit investigation therefore assesses the solvency and creditworthiness of borrowers before a loan application can be approved.
Solvency and creditworthiness
A solvency check is carried out as part of the requirements of the Swiss Consumer Credit Act. The solvency of a consumer relates to whether that consumer is in a position financially to repay a personal loan. The check takes into account net salary and certain monthly expenses. Based on the allowance or budget they have available, borrowers must be able to repay the loan amount within 36 months, including any interest accrued during that 36-month period. It is immaterial whether or not a longer term has been agreed; only the contractual interest accrued over 36 months is relevant for the check.
When checking creditworthiness, on the other hand, the general payment behavior of borrowers is considered relevant. Current debt enforcements in particular result in poor creditworthiness; loan applications are therefore generally rejected in this scenario. In order to determine an applicant's creditworthiness, the lender must obtain the necessary information from the ZEK.
How can I check my personal creditworthiness in Switzerland?
In Switzerland, you can obtain information about your personal creditworthiness from credit bureaus. The main credit bureaus in Switzerland are CRIF and Justitia. They can both provide information about your personal situation. Lenders must be able to demonstrate a legitimate reason to obtain personal information about private individuals – a loan application constitutes such a legitimate reason. Credit bureaus are bound by the terms of the Swiss Data Protection Act.
What factors have a negative effect on personal creditworthiness?
As previously mentioned, past payment behavior plays an important role – reminders and, in particular, debt enforcements have a negative impact on personal creditworthiness. Negative credit decisions can also affect creditworthiness – the number of negative decisions is one factor that plays a role here. Multiple ZEK entries can have a negative impact on a loan application. In this case, either the loan will be rejected or the terms, such as the interest rate, will be correspondingly less favorable.
Are there ways to improve your personal creditworthiness?
It is important to make sure that debts and bills are always settled promptly. If you have received a reminder or if the debt collection agency is already involved, any outstanding debts should be settled as soon as possible. It's a good idea to contact your creditors directly to inform them about the debt settlement process.
What's more, making several loan applications can also have a negative effect on credit decisions, so it's important to be patient when applying for a loan. The more credit applications that have been rejected, the more likely it is that future applications will also be refused. To increase your chances of securing a loan, you should therefore settle any outstanding debts and reminders before making a loan application. Only once all ZEK entries have been cleared will your chances of being approved for a loan with favorable terms improve.