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Created on 28.08.2023

Credit standing for private loans – what’s a creditworthiness check?

The creditworthiness check determines whether you get a private loan and under what conditions. We explain what creditworthiness means and what’s involved in a creditworthiness check in Switzerland.

When people in Switzerland apply for private loans, the lender checks the applicant’s creditworthiness. The creditworthiness provides information on the likelihood of the applicant being able to repay the loan within the agreed term.

Creditworthiness check, borrowing capacity and credit standing: the key points in brief

  • A creditworthiness check determines whether or not you’ll receive a private loan. The lender checks your borrowing capacity and credit standing.
  • The law makes borrowing capacity subject to various provisions: applicants must be of legal age, and the loan must not make them over-indebted. For this reason, the lender carries out a budget calculation.
  • The lender assesses various risk factors in relation to creditworthiness, such as payment behaviour, age and country of residence. The lender uses various sources for this.

What does creditworthiness mean?

The word “creditworthiness” implies that a borrower is deserving of a loan, perhaps because they have previously demonstrated their reliability. Put simply, creditworthiness means a person’s willingness and ability to meet their payment obligations in full and on time. 

What’s checked during the creditworthiness check in Switzerland?

The creditworthiness check is very important for lenders and doesn’t just determine whether a loan can be provided, but also under what conditions. There are two key factors in creditworthiness checks: the borrowing capacity and creditworthiness of the borrower.

Borrowing capacity: can the loan be repaid?

Borrowing capacity is a key part of creditworthiness. A person meets the creditworthiness requirements if they can legally conclude loan contracts. For example, they must be of legal age. But the borrowing capacity check also analyses the borrower’s financial means. To establish whether the loan can be repaid on time, the lender carries out a budget calculation, comparing the borrower’s expenditure with their income. To be deemed creditworthy, their income must exceed their expenditure. For example, expenditure and income include:

Possible expenditure itemsPossible income items
Possible expenditure items
Accommodation costs
Possible income items
Salary from main and/or part-time job
Possible expenditure items
Work-related expenses, such as commuting costs
Possible income items
Salary of a second person from a marriage or registered partnership
Possible expenditure items
Possible income items
Income from rent or leases
Possible expenditure items
Health insurance premiums
Possible income items
Alimony or maintenance payments
Possible expenditure items
Existing obligations, such as alimony or maintenance payments / Expenses on children
Possible income items
Pension income (but not Old Age and Survivors’ Insurance, as it isn’t pledgeable)
Possible expenditure items
Possible income items

Credit standing: are borrowers trustworthy from a financial perspective?

As well as borrowing capacity, lenders also assess credit standing as part of creditworthiness checks. This determines the likelihood of customers repaying a loan. Applicants the lender deems trustworthy, reliable and “willing to pay” are considered creditworthy. Customers’ financial trustworthiness is examined.

The creditworthiness check look at various factors to determine credit standing. These include:

  • Historic payment behaviour
  • Outstanding liabilities
  • Debt enforcement and payment collection measures
  • Personal data, such as age, gender, nationality and address
  • Frequency at which place of residence and employment are changed
  • etc.

Lenders can obtain the creditworthiness data required for the check from various external sources. In Switzerland, these include the Central Office for Credit Information (ZEK), debt collection offices, residents’ register offices and the credit agencies CRIF, Intrum Justitia, Dun & Bradstreet and Creditreform.

One of the main points of contact is the ZEK. This holds lots of positive and negative information about lenders’ payment behaviour. Lenders may attach different importance to information. 

How can you check your own creditworthiness in Switzerland?

Anyone who wants to find out about their own creditworthiness can contact the ZEK or the credit agencies mentioned above and request the information stored on them. That’s called a personal information query or a request for information. 

ZEK as an example: what creditworthiness data is stored there?

The ZEK stores the following data: the borrower’s last name and first name, data of birth, residential address, civil status, profession, information on loan applications (pending, rejected, current, expired contracts), leasing contracts, credit cards (blocked or withdrawn cards) and payment behaviour (creditworthiness code). The ZEK’s 100 or so members provide the relevant data. They include banks, leasing firms, car dealers and furniture stores.

To what extent does creditworthiness determine the interest rate on a loan?

Creditworthiness doesn’t just affect whether or not a loan is approved. It also determines the conditions under which borrowers receive the loan – for example, the interest rate and maximum loan amount. Generally speaking: the higher the risk your profile presents from the lender’s perspective, the higher the interest rate. The less risky the lender considers you, the lower the interest rate.

Four tips for improving your creditworthiness

You can influence your credit standing. These pointers will help to improve your creditworthiness. 

Tip 1: Optimize your payment behaviour if you need to

Make sure you pay invoices on time. That’s really easy with recurring, fixed-amount payments – for example, rent or lease payments – and transfers to other accounts with a standing order. Invoices from insurance companies, health insurance providers and telecommunications firms can be conveniently paid using eBill, for instance. The invoices are then sent directly to your e-finance, where all you have to do is confirm them. This means that the invoices don’t get lost or forgotten. 

Also important: if you ever receive an incorrect invoice via e-mail or post, complain immediately to avoid any debt enforcement proceedings being started.

Tip 2: Get incorrect or outdated creditworthiness information corrected

If you find incorrect or outdated information when requesting information about yourself, get it updated.

Tip 3: Keep spending within your means

When checking your creditworthiness, lenders compare your expenditure against income. Try to budget your outgoings to give yourself enough financial leeway. This shows the lender you’re likely to repay the loan.

Tip 4: Avoid making simultaneous loan applications to several lenders

When making a request to the ZEK, lenders can immediately see whether you’ve applied for a loan from various loan providers. Making simultaneous applications doesn’t make a good impression and tends to make you less attractive as a customer. So apply to the lender where you’ll have the best chance. Useful information: outstanding requests can be viewed at ZEK for as long as they are valid.

Why is a creditworthiness check important in Switzerland?

Creditworthiness checks give lenders greater certainty that borrowers are in a financial position to repay the instalments without defaulting. They also protect borrowers from becoming over-indebted.

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