Creditworthiness in practice. Why does the bank see it differently from the customer?

Creditworthiness is one of the most important elements of the property-buying process and also one of the most underestimated by clients. In common parlance, it boils down to a simple question: „how much can I borrow with my income?”. In practice, banks analyse the financial situation much more broadly, taking into account not only current earnings, but also long-term risks and crisis scenarios.

It is at this stage that there is most often a discrepancy between the client's expectations and the actual credit decision. People planning to buy a property are often convinced that their creditworthiness allows them to finance the chosen flat or house, while the bank presents a completely different calculation. This difference is sometimes surprising and leads to a change in purchase plans.

In markets such as Gdansk and all Tri-City, where competition for attractive properties is very high, a failure to realistically assess creditworthiness can result in a missed purchase opportunity. That is why cooperation with estate agency or an experienced local advisor should start with a sound financial analysis and not only at the stage of finalising the transaction.

We invite you to read on.

What exactly is creditworthiness?

Creditworthiness is the bank's assessment of whether the customer will be able to repay the loan obligation with interest on time over the entire term of the contract. It is not a one-off analysis of income, but a long-term forecast of financial stability, covering up to 20-30 years. The bank assumes that the borrower's situation may change and must take this fact into account in its calculations.

Contrary to popular belief, creditworthiness is not a fixed value. It changes with the level of interest rates, the lending policies of banks and the individual situation of the customer. Even people with high incomes may have a lower capacity if their source of income is considered unstable or risky.

For the customer, creditworthiness is often „here and now” - based on current earnings and expenditure. For the bank, it is a future scenario in which repayment capacity must be maintained even in a downturn. This fundamental difference in approach is a major source of divergence.

How does the customer see their income and how does the bank see it?

The client usually analyses his income based on the net amount coming into his account. For him, this is the real money at his disposal each month. The bank, on the other hand, averages the income, often over a period of 6, 12 or even 24 months, eliminating one-off and irregular inflows.

The form of employment is also important. An indefinite employment contract is assessed much more favourably than civil law contracts or a business run for less than 12-24 months. Even high incomes can be partially „cut” in the calculation if the bank considers them to be less stable.

This causes a customer who subjectively feels financially secure to be assessed as higher risk from the bank's perspective. It is at this stage that the first disappointment with the results of the capability analysis arises.

Cost of living and hidden financial burdens

The second key element is household living costs. The bank does not rely solely on the customer's declarations, but applies its own minimum cost of living standards, depending on the number of people in the household and the location.

In addition, all financial commitments are analysed - including those that the customer considers to be insignificant. Credit card limits, hire purchase, leases or overdrafts reduce creditworthiness, even if they do not currently generate real costs.

From the bank's perspective, every potential liability is a risk that must be taken into account. As a result, the creditworthiness calculated by the bank is sometimes significantly lower than that estimated by the customer himself.

Why does the bank always count capacity more carefully than the customer?

Banks are regulated institutions and obliged to maintain high standards of financial security. Their objective is not to maximise the amount of credit, but to minimise the risk of insolvency. This makes creditworthiness calculated in a conservative manner, taking into account a number of negative scenarios.

From the customer's point of view, this approach may seem overly cautious. However, the bank takes responsibility not only for the interest of the borrower, but also for the stability of the entire financial system. Any mortgage loan must also be secure in crisis conditions.

This is the reason why banks apply safety buffers that significantly reduce the maximum possible amount of financing compared to customers' expectations.

Safety buffers and resistance tests

One of the key elements of the creditworthiness assessment are the mechanisms that protect the bank against the risk of customer insolvency. In practice, this translates into so-called resilience tests, which often take borrowers by surprise.

Key assumptions used by banks include:

• Interest rate rise buffer - the bank verifies that the customer will be able to cope with the repayment of the instalment even with a significant increase in interest rates, regardless of the current level of rates.
• Simulation of a higher instalment - the instalment taken into account for the capacity calculation is usually higher than the one the customer will actually pay once the credit agreement is signed.
• Long-term assessment - the bank does not only analyse the current financial situation, but assumes less favourable scenarios that may arise in the future.

For the customer, this way of calculation is sometimes incomprehensible, as they relate their ability to their current income and current burdens. From the bank's perspective, however, it is a necessary protective mechanism to reduce the risk of repayment problems in the long term.

Bank scoring and individual risk assessment

Each bank uses its own scoring system to assess credit risk. It is not based solely on income, but combines a lot of data - financial and non-financial - such as form of employment, length of service, credit history or use of banking products. The scoring is designed to answer one question: how likely is it to repay the loan on time in the long term.

In practice, this means that two people with identical earnings may receive completely different credit decisions. A customer with predictable income, stable employment and a good repayment history will be assessed more favourably than someone with higher but irregular incomes or frequent job changes. The bank analyses not only „how much”, but above all „how reliably” the customer earns.

Therefore, creditworthiness is not a universal or fixed concept. It depends on the specific bank, its current risk policy and the market situation. It is this individual assessment that makes the creditworthiness seen by the bank often significantly different from that which the customer himself assesses on the basis of his income.

Creditworthiness and the process the purchase of real estate

Creditworthiness should be the starting point of the entire purchasing process, not the end of it. It determines the realistic budget, the scope of the search and the negotiation strategy. Lack of this knowledge at the outset often leads to costly mistakes.

In dynamic markets such as Gdansk and the Tricity, reaction time is of paramount importance. A client who knows his or her real financial possibilities can act more quickly and confidently, which increases his or her chances of buying an attractive property.

That is why the experienced estate agency should synchronise the search process with the customer's creditworthiness analysis. In addition, this will save unnecessary nerves for potential buyers and avoid any misunderstandings.

The intermediary's role in realistic purchase planning

A good realtor does not rely solely on the client's budget statements or preliminary simulations found on the internet. His or her job is to translate the buyer's expectations into realistic market and financial possibilities before an emotional commitment to a particular property emerges. In this way, the client moves from the outset within a safe price range that has a realistic chance of being financed.

The intermediary's cooperation with credit advisers and knowledge of current banking practices play a key role here. An experienced intermediary is able to assess whether a property meets the credit requirements (e.g. in terms of legal status, form of ownership or intended use), even before the customer makes an offer. This significantly reduces the risk of a situation in which an attractive property turns out to be impossible to finance.

This approach structures the decision-making process and reduces stress on the buyer's side. Instead of acting impulsively, the client makes decisions based on hard data and realistic scenarios, which translates into greater transaction security and a better negotiating position.

Synchronisation of financing with the transaction schedule

Creditworthiness has a direct impact not only on what the buyer can purchase, but also on the when i under what conditions can finalise the transaction. The loan procedure requires time to collect documents, analyse the property, issue a decision and release funds. Each of these stages should be synchronised with the provisions of the preliminary agreement.

Failure to match deadlines appropriately can sometimes be one of the most common causes of problems when buying a property. A deadline for concluding the notarial deed that is too short and does not take into account banking realities can lead to time pressure, the risk of losing the deposit or the need to renegotiate the terms of the contract. In extreme cases, this results in the transaction breaking down.

Therefore, creditworthiness should be treated as a strategic element of the entire purchasing process and not merely a banking formality. Adequate planning of the timetable, taking into account credit procedures, allows the transaction to go through smoothly, without unnecessary tensions and costly consequences.

What is most likely to reduce creditworthiness? - summary

Element	How the customer sees it	As assessed by the bank	Impact on capacity
Income	Steady and sufficient	Averaged and buffered	Medium / high
Contract	„I have been working for years”.”	Form and continuity of employment	High
Credit card	„I don't use”	Potential debt	Medium
Cost of living	Subjective	Minimum banking standards	High
Interest rates	Current	Future scenarios	Very high

Summary

Creditworthiness in practice is a much more complex issue than clients' common perceptions suggest. Banks look at it through the prism of long-term risk, financial stability and crisis scenarios, while customers mainly focus on current income and the current instalment.

By understanding the difference, many disappointments and costly mistakes can be avoided at the property purchase stage. An informed customer knows that creditworthiness is not just a formality, but the foundation of the entire decision-making process.

That is why cooperation in Tricity with experienced estate agency significantly increases the security and effectiveness of your purchase. Realistic financial analysis, combined with local experience, allows decisions to be made calmly, knowledgeably and without unnecessary risk.

FAQ - Frequently asked questions

Is creditworthiness the same at every bank?

No, creditworthiness can vary significantly from bank to bank. Each financial institution uses its own risk assessment models, assigning different weights to income, cost of living or form of employment. There are also differences in how capacity is calculated for B2B contracts, business activities or irregular income. In practice, this means that a customer may receive radically different credit decisions, despite an identical financial situation.

Does a high salary always mean high capacity?

A high income does not in itself guarantee a high creditworthiness. Banks mainly analyse the stability and recurrence of income and the ratio of income to fixed liabilities. A person with a high salary but high living costs, leases or consumer loans may have a lower capacity than someone earning less but keeping their finances in order. Credit history and how liabilities have been managed in the past are also important.

Does a credit card really reduce capacity?

Yes, a credit card affects creditworthiness regardless of whether it is actively used. The bank treats the limit granted as a potential debt that can be used at any time. As a result, part of the capacity is „frozen” against this limit. For this reason, it is often worth considering lowering the limit or closing unnecessary cards before applying for a mortgage.

When is the best time to check creditworthiness?

It is best to check your creditworthiness even before you start looking for a property. This allows you to set a realistic budget, avoid disappointments and focus only on offers that can actually be financed. An early analysis of capacity also enables you to prepare for possible adjustments, such as paying off debts or getting your financial records in order.

Does an estate agent help with creditworthiness?

Yes, an experienced estate agent very often also supports clients at the financing stage. Working together with credit advisors, he or she is able to help realistically assess purchase options and match offers to actual capacity. This makes the entire process - from the selection of the property to the finalisation of the transaction - run more smoothly and with less risk of failure.