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Do you know your personal credit rating?
You can now request free credit information online from CRIF AG at comparis.ch.Learn more
A person's credit standing serves as an indication of how likely they are to meet their financial obligations. Both ability and willingness to pay are taken into account. This is why banks check the credit capacity and creditworthiness of their customers.
Credit capacity – is the customer able to pay?
Credit capacity refers to the ability of a customer to pay back a loan. To determine this, lenders examine the customer's budget carefully. Do they earn enough to afford the loan amount they would like?
The minimum requirements of a credit capacity check are set by law. The borrower must be of age and capable of paying back the loan including interest within 36 months. This is determined based on the person’s disposable income – the equivalent of the non-seizable income as defined in the Swiss Debt Enforcement and Bankruptcy Act and in cantonal guidelines. It basically refers to the net salary minus various expenses.
Standard guidelines for calculating a person’s budget are defined in the Consumer Credit Act (KKG) and must be applied by the banks. You can calculate your own borrowing capacity quickly and easily using the credit limit calculator at comparis.ch.Calculate credit limit
Creditworthiness – will the customer pay?
Creditworthiness refers to how likely it is that the customer will pay back their loan. This requires an assessment of the customer's financial trustworthiness. To this end, lenders consider the customer's payment history, outstanding debts and any negative events like debt enforcement or collection measures. For your part, you can improve your creditworthiness in the medium term by keeping these factors in good shape. Also taken into account are any statistically relevant risk factors such as age, nationality, residence status, place of residence and the frequency of home moves and workplace changes.
Lenders gather this information from credit databases, the Centre for Credit Information (ZEK), debt collection offices and residents' registration offices. This data therefore affects your chances of getting a loan and the conditions you will be offered.
In Switzerland, there are four credit agencies that collect and provide credit data: CRIF, Intrum Justitia, Bisnode and Creditreform. They are not only consulted in relation to loans. Companies, and to a lesser extent private individuals, will have an interest in your credit score if you wish to order online on account, take out a mobile phone agreement or rent an apartment. You don’t have to agree to the collection of this data. However, these database companies must comply with the Data Protection Act. Anyone requesting information must prove they have a legitimate interest in your data (e.g. they have received a loan enquiry from you).
Are you interested in finding out your personal credit score?
Data on financial activity, creditworthiness and ability to pay is collected in credit databases. These databases can then function as a source of information about the payment practices of companies and private individuals.
Do you know how good your creditworthiness is according to credit databases? Request your credit score from Comparis (in conjunction with CRIF AG) now or submit a personal information enquiry (self-assessment) using our template.
An insufficient credit score means no loan
A credit check must always be performed before a loan is approved. Those with an insufficient score will have their application rejected. All loan enquiries are registered with the Central Office for Credit Information (ZEK). Open enquiries are stored as long as they are valid. Any rejections are available to view by all member lenders for a period of two years. This can make it more difficult for borrowers to obtain the loan they want, and negatively affect the rates and conditions offered. For this reason, it is important to avoid having a loan application rejected and submitting multiple enquiries.
Find out what data the ZEK collects and how long it is stored for (page in German and French only).
From a customer's point of view, the problem is that the lenders do not provide information on their risk policy for security reasons. If a customer is rejected, they are not usually given an explanation.
Our tip: The team of experts at Credaris, an independent partner service of comparis.ch, will be pleased to help you find the best loan – free of charge and with no obligation. Credaris will check your data before placing your loan enquiry with a bank. This increases your chances of a positive outcome and significantly reduces the risk of negative entries being recorded at the ZEK.
Interest rate depends on credit standing
You can generally expect that clients with riskier profiles (from the lender’s point of view) will be offered higher interest rates. The lower the lender rates the client's risk, the lower the interest rate offered. The detailed risk assessments vary between lenders, can change at any time and, for security reasons, are often not available to the public. In addition, if an application is rejected, the customer does not usually find out the reason why.
But beware: applying for a loan with several lenders simultaneously does not create a good impression. Open enquiries remain visible at the ZEK for as long as they are valid. If you have parallel enquiries pending, you become less attractive to lenders. A rejection can reduce your chances of obtaining a loan from a different lender or result in higher interest rates. It is therefore advisable to submit your enquiry to a lender with whom you have the best chances of being approved for the loan you are looking for.
The team at Credaris, a partner service of comparis.ch, will be pleased to help you with this. Credaris will check your credit standing and loan enquiry in advance with no risk to you, in order to determine whether a loan is possible and under what conditions.
Approval of a loan is forbidden by law if it would lead to over-indebtedness (Art. 3 UWG).
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