Creditworthiness

Published: 1/2/2015
Creditworthiness is an assessment by a credit institution showing whether a potential debtor can assume the obligation of regular annuity/instalment payments under a loan. In its assessment, a credit institution uses primarily information and documentation obtained from consumers but it also relies on information obtained from the credit register (HROK) in which records are kept of all borrowing by a loan applicant that are taken into account when assessing additional financial burden in connection with the obligations that would arise with a new loan agreement.

Each credit institution prescribes the documentation and the terms and conditions used for determining if the loan applicant is creditworthy. In most cases, key information for the assessment of creditworthiness are the amount of regular monthly income, including the amount of the burden-free monthly income, the amounts of different forms of savings and/or units in investment funds and the amount of current indebtedness. The final decision on a client's creditworthiness eligibility also depends on the quality and value of presented instruments of collateral for ensuring timely loan repayment and some credit institutions also take into consideration client status, i.e. whether the loan applicant already uses products and services of an individual credit institution. In some cases it is possible to negotiate a co-debtor relationship if the applicant does not meet the required conditions of a credit institution.

IMPORTANT: The obtaining of all the necessary evidence on meeting the conditions of a credit institution may be time-consuming and very often associated with additional costs. So it is important to take the necessary time and come well prepared to minimise the risk of disappointment should the credit institution decide to reject the loan application.

Credit register (HROK)

The assessment of the necessary creditworthiness is as a rule made also on the basis of data in the Croatian Registry of Credit Obligations (HROK). The users of HROK are credit and financial institutions (banks, savings banks, card issuers, leasing companies, etc.) and natural and legal persons (clients) with obligations under loans, credit cards, account overdraft facilities, leasing and other forms of monetary obligations. Credit institutions monitor the existing and possible further consumer borrowing as part of their good practices which aim to avoid excessive consumer borrowing and timely assessment of inability to repay debt.

Guarantor and/or co-debtor arrangements are treated in HROK as collateral. The main debtor's default on his/her loan repayments may be a hindrance to the granting of a loan. When a debtor is not able to settle his/her obligations, the obligation will fall on the guarantor or co-debtor. Therefore, a credit institution will view such obligation as your contingent obligation and may in such situations reject your loan application.

A consumer may request a credit report from HROK not only for the purposes of a loan application but also for his/her own information..

Osim prilikom zahtjeva za kredit, potrošač može u svrhu svoje informiranosti i osobno zatražiti kreditno izvješće od HROK-a.

Note: Data in HROK are updated on a monthly basis. Data on monetary obligations are kept in the register for a period of four years following their full settlement.