How can I improve my credit score when applying for finance?

To improve your credit score, it’s essential to work on several fronts that reflect your financial strength and reliability in the eyes of lenders. Here’s how you can act on each of the factors credit institutions evaluate:

💰 Liquidity (Financial Capacity)
Objective:
Show that you generate enough income to repay the requested loan.
Sub-criteria:

• Stable income: Highlight your salary, pension payments, annuities, or any other reliable, regular income.
• Ongoing expenses: Review and reduce your fixed costs (rent, existing loans, insurance, living expenses) to improve your cash-flow ratio.
• Bonuses and commissions: Include any exceptional payments (annual bonuses, commissions, gratuities) in your income projections.
• Rental income: Earnings from residential or commercial property can further strengthen your application.
  Impact on evaluation:
  Strong liquidity lowers default risk and usually earns you a better interest rate. To improve, focus on increasing your income sources and cutting fixed expenses.

📈 Solvency (Payment Reliability)
Objective:
Prove you meet your financial obligations regularly and on time.
Sub-criteria:

• Debt collections: Avoid any judicial collection proceedings due to unpaid debts.
• Payment delays: Frequent or significant late payments hurt your credit profile.
• Payment orders: Make sure no formal payment orders are on record—they signal serious financial trouble.
• Payment history: Maintain an exemplary track record of repaying debts and obligations.
  Impact on evaluation:
  Reliable payment history reassures lenders and can secure you a lower interest rate. To bolster this, set up automatic payments and honor all your due dates without fail.

✅ Credit History (Financial Conduct Record)
Objective:
Verify that you’ve met past financial commitments responsibly.
Sub-criteria:

• Credit bureau records: Check your file with Swiss credit information centers (ZEK/IKO), which log all loan applications and payment incidents.
• Past performance: Keep your record free of serious financial incidents and demonstrate consistent debt repayment.
  Impact on evaluation:
  An unblemished history is a major advantage and opens the door to more favorable loan terms. If you have past incidents, work to resolve them and gradually rebuild your record.

🏡 Stability (Personal & Professional Situation)
Objective:
Demonstrate your long-term reliability.
Sub-criteria:

• Marital status: While not mandatory, a stable family situation (for example, being married) can be viewed positively.
• Age & financial maturity: Greater age and financial experience signal responsible money management.
• Employment duration & contract type: Long tenure and a permanent (indefinite) contract boost your credibility.
• Residential stability: Living at the same address for a long period shows you’re well-rooted.
• Residence permit (for non-residents): A long-term permit indicates stability in Switzerland.
  Impact on evaluation:
  Personal and professional stability increases lender confidence in your repayment ability. Highlight your work history and residential consistency in your credit application.

🌟 Reputation (Social Image & Conduct)
Objective:
Assess the overall perception of your financial and personal behavior.
Sub-criteria:

• Media presence: Positive press coverage or public mentions can enhance lender trust.
• Online behavior: A discreet, respectful social-media presence supports a solid reputation.
• Lifestyle: A balanced lifestyle—neither overly extravagant nor excessively frugal—is generally seen favorably.
  Impact on evaluation:
  A strong reputation can help you secure more advantageous loan conditions. To improve this dimension, maintain responsible financial habits and prudent spending.

In Summary
By optimizing all five areas—liquidity, solvency, credit history, stability, and reputation—you’ll raise your overall credit score. This leads to more competitive financing conditions (lower interest rates) and greater lender confidence.

Key steps to take:

1. Increase and diversify your income sources while controlling your expenses.
2. Automate payments to avoid delays.
3. Resolve any past financial incidents with professional guidance.
4. Emphasize your personal and professional stability in your application.
5. Practice prudent, responsible financial behavior.

These combined efforts will help you gradually improve your credit score and unlock better financing opportunities.

An article by Munur Aslan, Director of MultiCredit