How to improve my liquidity for a credit application

Improving your liquidity means strengthening your ability to generate available cash flow that can be devoted to repaying your loans. This involves managing your financial inflows and outflows more efficiently and optimizing your income sources—an especially important consideration for reassuring Swiss lenders. Here are some concrete strategies to boost your liquidity:

1. Increase Your Income

• Diversify Income Streams
  Supplement your primary earnings with side activities—freelance projects, part-time jobs, or passive-income investments (dividends, rental income, etc.).
• Advance Your Career
  Negotiate a salary increase or explore higher-paying roles. A higher income not only improves your repayment capacity but also inspires greater lender confidence.
• Bonuses and Exceptional Payments
  Include any regular bonuses, commissions, or other extra compensation in your loan application to demonstrate that they’re a stable part of your finances.

2. Reduce Costs and Optimize Spending

• Create a Realistic Budget
  Track fixed expenses (rent, insurance, subscriptions) and variable costs each month. Identify and eliminate or reduce non-essential spending to free up more cash for loan payments.
• Renegotiate Contracts
  Seek better terms on insurance policies, phone plans, or utility bills. Even modest savings on your fixed costs can significantly boost liquidity.
• Early Repayment and Loan Consolidation
  If you have multiple or high-interest loans, consider refinancing or consolidating them into a single loan at a lower rate to reduce your overall monthly outlay.

3. Manage and Optimize Cash Flow

• Automate Your Savings
  Set up automatic transfers to a dedicated savings account. This “forced saving” approach helps you build a reserve of cash that you can use for larger down payments or early debt repayments.
• Monitor Your Finances Closely
  Use budgeting apps or personal accounting software to track income and expenses in real time. Early detection of unnecessary spending lets you better plan for upcoming loan obligations.

4. Strengthen Your Banking Relationship

• Choose the Right Account
  Compare Swiss bank accounts to minimize fees and access useful features like over-spend alerts or regular spending reports.
• Maintain Open Communication
  Cultivate a trusting relationship with your banker. An engaged advisor can offer tailored guidance on improving your liquidity or restructuring existing credit lines.

Key Takeaway Before Applying for Credit
Focus on three pillars to boost your liquidity: increase income, reduce expenses, and maintain strict cash-flow control. These measures not only enhance your ability to repay but also strengthen your credit profile in the eyes of Swiss lenders—helping you secure more favorable loan terms and bring your future projects to life. For personalized advice, consider consulting a financial advisor.

An article by Munur Aslan, Director of MultiCredit