Monthly Archives: December 2019

How to increase your credit standing?

Are you planning to take out a loan for a larger amount? Are you going to buy an apartment on credit? It is worth preparing for it and improving your creditworthiness, if possible. In this article you will learn some practical tips on how to increase your credit standing!

Your home budget

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The higher your income, the more creditworthiness you can have – simple. Therefore, if you are planning a loan, e.g. for an apartment, it is worth trying to maximize them in advance, e.g. ask for a raise or reduce unnecessary expenses and financial burdens. Pay off other liabilities as soon as possible – other loans, cancel credit cards and account limits – even if you don’t use them. If you are unable to pay back previous loans and advances, consider consolidating them. The consolidation loan will make you pay a lower monthly installment.

Loan with another person

Loan with another person

If you want to increase your credit standing, one way is to take out a loan with another person. If the situation allows, you can consider credit with your partner, but also a parent or sibling!

A longer loan period can significantly affect the monthly installment. The amount of the installment for it has a significant impact on our creditworthiness. Therefore, if we want to increase our ability, it is worth considering extending this period. However, it should be remembered that the longer the loan, the more we will pay the bank for its service.

Credit History

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Make sure you have a good credit history in advance at BIK. There are several rules by which this can be achieved: Pay your financial obligations on time.Consider buying something in installments – if you have no credit history, the bank knows nothing about you as a borrower. Therefore, if you have never taken anything for a loan, it is worth taking it for a small purchase, even if you do not need it. If you have a problem paying off your loan, negotiate with the lender. Avoid taking a new loan to pay back your previous one. This can lead to a debt loop. You can read how to get out of financial debts here.

What is credit risk?


The bank’s credit risk is the risk that the borrower will not repay his loan in the agreed manner. A number of factors can affect credit risk, such as the currency in which the loan was granted or the sum of the loan. From the bank’s perspective, the customer’s credit history is also an important issue.

When taking a loan, we rarely think about the other side, i.e. the bank that gives us such a loan. Meanwhile, it’s always a risk for the bank. Why? There is a probability that the borrower will not diligently meet his obligations. Let’s try to expand the subject, which is the bank’s credit risk.

Credit risk – definition

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The bank’s credit risk is, in the simplest terms, a chance that the person who made the loan commitment will not regulate it in accordance with the terms and conditions of the contract. By lending money, the bank risks, for example, that it will simply not be given back. It is therefore extremely important to correctly estimate the credit risk that the bank makes. Potential sources of credit risk are also of great importance. How much this risk is depends on many aspects, including the amount of the loan or the currency in which it is granted.


Credit risk management in the bank

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The correct credit risk assessment and reduction as much as possible is a priority for the bank. Let’s use the analogy from everyday life: if the money wants to borrow a person who has several times damaged our trust, did not pay back the debt at all or did it with a long delay, most likely she will not be able to count on another loan on our part, because it is simply too much financial danger. That is why the banks examine our creditworthiness so thoroughly, while we, as customers, should take care of it in the interests of our own interests.

Due to credit risk, the bank’s credit history

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Is also important for the bank, which says a lot about our diligence and timeliness in the field of settling liabilities . To check the credibility of a potential borrower, the bank uses a specific tool, which is credit scoring . To sum up, limiting credit risk is extremely important for the functioning of the bank, just like the proper model credit risk. Of course, how the bank limits and manages credit risk is an individual matter.

To sum up: credit risk is a very important issue for the bank. Awareness that the correct assessment of credit risk has a huge impact on the financial security of the bank can help applicants understand the need to provide the required documents, etc. Moreover, knowledge about the importance of financial risk should become an additional motivation to effectively look after your credit history.