How can I improve my creditworthiness when applying for credit?

To improve your solvency for a loan application, you need to show lenders that you have the capacity and consistency to meet your financial commitments. Here are several strategies to strengthen your solvency profile:

1. Pay on Time and Automate Payments
   • Timely Payments: One of the strongest indicators of your solvency is your payment history. Always settle bills, loan installments, and other obligations by their due date.
   • Automation: Set up standing orders or payment reminders to avoid accidental misses that could harm your financial reputation.
2. Reduce and Consolidate Your Debt
   • Pay Down Existing Debts: Work to lower the total amount of your outstanding loans, since a high debt ratio is seen as a risk.
   • Debt Consolidation: Combining multiple debts into a single loan with better terms can reduce your monthly burden and improve your debt-to-income ratio.
3. Optimize Your Credit Record
   • Check Your Credit Report: Regularly review your file with credit bureaus (e.g., ZEK/IKO in Switzerland) to ensure all information is accurate. Dispute any errors or negative entries promptly.
   • Avoid Multiple Credit Inquiries: Frequent loan applications in a short time can signal financial instability. Limit requests to preserve a clean, stable record.
4. Improve Your Liquidity
   • Increase Your Income: Diversify and boost your income sources—through salary raises, side gigs, or income-generating investments.
   • Control Your Spending: Create a realistic budget to manage fixed costs and free up cash for loan payments. A well-managed cash flow reassures lenders of your repayment ability.
5. Strengthen Personal and Professional Stability
   • Job Security: Long-term employment—ideally with a permanent contract—demonstrates steady income.
   • Residential Stability: Staying at the same address for an extended period signals rootedness and reliability.
6. Adopt Responsible Financial Behavior
   • Prudent Credit Use: Avoid risky spending or relying on loans for non-essential purchases.
   • Transparency and Honesty: Provide full and accurate information in your application. Openness builds lender trust and improves your solvency assessment.

Key Takeaway Before Applying for Credit
A holistic approach—punctual payments, debt reduction, credit-file optimization, and improved liquidity—reinforces your solvency. Combined with personal and professional stability and responsible financial habits, this creates a strong profile that can secure you better loan conditions (lower interest rates). Implementing these steps not only raises your chances of approval but also ensures sound financial management in the long run.

An article by Munur Aslan, Director of MultiCredit