When we assess your credit card, overdraft or personal loan application, it’s our job to make sure you can comfortably handle these debts. Let’s look at what creditworthiness actually is, what it involves, and why you should care.
What is creditworthiness?
It might be a bit of a mouthful, but the concept of creditworthiness is simple enough to understand.
The term refers to a person or company considered suitable to receive credit – mainly due to being reliable in paying money back in the past, as well as having enough funds to stay afloat if things go south.
There are ways to enhance your creditworthiness. But for now, it’s best to wrap your head around the basics.
What do we look at?
When you apply for credit with NAB, we'll look at lots of different factors to determine your creditworthiness such as your income, assets, spending, and debts. We’ll also look at the following things.
Your credit file
This is your history of credit applications and interactions. You can ask for a copy of this file to see where you stand – and to ensure your information's accurate.
The credit reporting bodies we use are:
- illion (formerly trading as Dun & Bradstreet Australia), opens in new window
- Equifax (previously known as Veda), opens in new window
- Experian Australia, opens in new window.
Unless you plan to buy a super yacht or 60-roomed Sydney Harbour citadel, we’re not expecting you to be super-rich. Instead, we’re looking for proof of steady, regular income—each week, each month.
Do you put aside a bit from your pay packet each month? Even a modest bank account with a short savings history suggests you’re a reliable character.
Retirees, for example, may not have high incomes, but will have significant assets in reserve. So long as these are reasonably liquid, they’ll boost your creditworthiness.
It may seem odd that debt can make you more (and not less) creditworthy. However, banks like to see evidence of your ability to manage debt and pay things down.
That said, it’s a question of balance – and it’s important your debts are well within your capacity to handle.
Why does creditworthiness matter?
It matters to you
Used responsibly, credit can get you to where you want to be, quicker than you might think.
But we don’t want you taking on debts you can’t afford, to become slaves to your own mortgage, or slide into financial distress.
That’s why we take our ‘Fair Value’ ethos seriously. By taking care of your creditworthiness, we’ll help you achieve your financial goals and make your life better – not worse.
It matters to us
Lending recklessly isn’t good for us, for our shareholders, or for our community. But most importantly, it isn’t good for you.
That’s why creditworthiness matters to us – and why we take our role as responsible lenders very seriously.
Need help budgeting or managing debt? We can help with money tools and tips.
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.