NEW! Our Hero’s Journey tool can help you with your next step towards financial freedom - click here to try now.
Advertiser Disclosure
Middle age senior woman sitting at the table at home working using computer laptop clueless and confused expression with arms and hands raised.

What is creditworthiness?

By: Kate Anderson | 28th May 2021

When it comes to applying for a credit card or a loan, your creditworthiness can play a huge role. But what is creditworthiness and how does it really affect you?

We break down what creditworthiness is, what factors a lender considers and how you can improve your credit status.

What is creditworthiness?

The definition of creditworthiness is the extent to which a person or company is considered suitable to receive financial credit. Basically, a lender uses your creditworthiness to determine whether they think you will repay them if they lend you money.

If they decide that you will, then congratulations! You are creditworthy. 

What factors do lenders consider?

Lenders evaluate your creditworthiness based on a review of your past handling of credit and debt. They also consider your ability to afford the agreed repayments.

They tend to take the following into account:

The key thing to remember when thinking about creditworthiness is that no two lenders will assess information in the same way. So you may have a solid credit score, but there is no guarantee of a successful application. It is more about whether that particular lender thinks you are a safe bet.

How can you improve your creditworthiness?

Worried about your creditworthiness? There are some things that you can do to improve your situation.

Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

Was this article helpful?