How can i calculate my credit line?

 

 

The amount of your credit installment is determined by your personal credit limit, which is usually based on your income and expenses, but can also be influenced by other factors.

What is a credit limit?

Personal credit can be beneficial if used in moderation, but too much of it can also be harmful. The Consumer Credit Act prevents credit from leading to over-indebtedness by setting an individual credit limit based on income and living expenses. These expenses usually include rent, health insurance, taxes, and other essential living expenses.

If you subtract your regular monthly expenses from your income, you'll have a balance left over that you can use to repay a loan.

The allowance determines how high the installment of the loan can be

In order for the principle of paying off a loan with your tax allowance to be successful, one requirement must be met: The loan payment must not exceed the amount of your tax allowance, otherwise you will go into the red every month and become overindebted. To avoid this, the Consumer Credit Act stipulates that you should theoretically be able to repay your loan, including interest, in 36 months. You are allowed to choose a longer period, but this calculation is based on these 36 months.

To find out your credit limit more easily, we can do a simple calculation: Take your allowance and multiply it by 36 to get the maximum amount of credit you can have. Consider as an example:

Calculation example: How high may the loan be at what income?

Let's just assume that you earn 5,000 francs net per month. We now compare this income with your exemplary fixed costs.

5'000 net salary
– 1'300 Housing costs (rent or mortgage interest)
– 750 taxes
– 500 Health insurance
– 1'200 Cost of living (food, electricity, clothing, insurance, etc.)

= 1'250 tax-free amount

1,250 francs allowance times 36 (number of months in which you theoretically have to be able to repay the loan) = 45,000 francs credit line – so in this situation you could take out a loan of maximum 45,000 francs.

How can I increase my credit line?

It's important to remember that the numbers above are only meant to serve as an example. In reality, there are many other factors that play a role in determining your credit limit. B. The information that is stored about you at the Central Office for Credit Information (ZEK), your place of residence and whether you are married or not. In general, an amount of 1.200 francs used as a standard for living expenses. You can change your available credit by either increasing your income (which isn't always easy) or moving to a cheaper apartment to lower your rent. Another easy option would be to apply for the loan jointly with another person; this greatly increases your chances of approval!

Homeowners have an advantage because mortgage rates are generally lower than apartment rents. However, there is the potential for significant savings if you transfer the mortgage to a less expensive lender.

Also critical: credit rating

However, the credit limit determined in this way is only part of the evaluation of your credit application. The credit check also takes into account your payment history: If you pay all your bills on time, it shows that you are a reliable business partner and the banks are happy to work with you. But if you're constantly receiving reminders for payments due, it gives the negative impression that they have to constantly remind you to make payments and that means more work for them. For this reason, financial institutions tend to give less money (or deny credit) when they see this type of behavior.

It's wise to keep track of your finances from the beginning so you can manage them properly and have access to the full loan amount when needed.

Calculating your credit limit is primarily for your own safety, so you don't end up taking on more debt than you can handle. If you've asked for a higher loan amount than stated, there's a reason for that and it should be taken seriously. Avoid offers like "no credit check loans," as they can initially appear to meet your needs, but ultimately become a huge burden. Contact us beforehand so that we can better assess the situation and develop a suitable solution together.

This procedure increases the likelihood of getting a personal loan and guarantees that everything is legitimate.