Creditworthiness is one of the most important factors in loan approval. Whether you want a mortgage, a consumer loan, or refinancing, the bank will first check whether you can realistically repay the monthly instalment. Even though the process may seem complicated, banks use fairly similar rules in their calculations, based on legislation and internal credit assessment models.

In this article, we explain how banks calculate creditworthiness, which factors they consider, why calculations differ from one bank to another, and how you can check your own borrowing capacity with the help of a calculator.

1. What exactly is creditworthiness?

Creditworthiness means how much you can afford to borrow based on:

  • the amount of your income,
  • the regularity/stability of your income,
  • the number of dependent family members,
  • existing financial obligations,
  • living expenses,
  • financial reserves,
  • past payment discipline (banks check records in databases such as SISBON),
  • the type and term of the loan.

The bank wants to make sure that after paying all obligations, you still have enough money left for normal living expenses. That is why it uses different indicators, the most important of which is DSTI, often also called DSR (Debt Service Ratio) - the same ratio, not two different metrics.

2. DSTI (DSR) - the key indicator of creditworthiness

DSTI (Debt-Service-to-Income), often also called DSR in practice, means the ratio between monthly obligations and monthly income. The official term used by Banka Slovenije in its regulation is DSTI; “DSR” is simply an informal variant of the same term you’ll come across in bank materials or the media.

The formula is simple: DSTI (DSR) = all monthly obligations / net monthly income.

This is not just an internal rule of individual banks - it is a macroprudential measure set by Banka Slovenije: since 1 July 2023, DSTI (the ratio of monthly debt service to monthly income) on newly approved consumer and mortgage loans generally may not exceed 50%, regardless of income level (before that, the limit was lower for lower incomes). Each quarter, banks may approve only a limited share of new loans (up to 3% for consumer loans and up to 3% for mortgage loans) with a higher ratio. Obligations include loans, leasing, credit cards, overdrafts, instalment purchases, and alimony/maintenance payments, and banks may also include other/additional factors in their calculations.

What counts as an obligation?

  • existing loans,
  • leases,
  • credit cards,
  • account overdrafts,
  • instalment purchases,
  • alimony/maintenance payments.

Even if you do not use your credit card, the bank often includes a predefined percentage, usually around 3-5% of the card limit, as a monthly obligation.

3. Minimum living expenses

In addition to DSR, there is a statutory minimum consumer creditworthiness floor: after paying all loan instalments, you must have at least €745 net per month left over (the amount has applied since July 2023; Banka Slovenije reviews it every December). This is a safeguard that applies regardless of how “favourable” the DSR calculation otherwise looks. For each dependent family member an additional amount must remain, and banks may also assume higher household costs under their own models. Current amounts and worked examples are in minimum living costs for a loan.

4. How do banks actually calculate creditworthiness?

In practice, the process looks like this:

1. STEP: The bank checks your income

  • salary,
  • holiday allowance,
  • bonuses,
  • pension,
  • income from fixed-term employment,
  • income from a sole proprietorship (usually the average of the last 12 months).

2. STEP: It subtracts all your existing obligations

This includes all loans and overdrafts it finds in SISBON. It also takes into account potential obligations arising from guarantees.

3. STEP: It takes minimum living expenses into account

If, after deducting obligations and living expenses, enough remains, the process continues.

4. STEP: It calculates the maximum permitted monthly instalment

This is the most you can pay each month.

5. STEP: It checks loan risk and calculates the maximum loan amount

Banks take into account the risk of the loan, reflected in your borrowing history and current financial situation. The maximum loan amount is calculated based on:

  • the interest rate,
  • the loan term,
  • the type of loan,
  • collateral.

5. Why do calculations differ between banks?

Although the law sets the general framework, each bank has its own internal models. They differ in:

  • whether salary supplements are included,
  • how income from a sole proprietorship is treated,
  • stricter or more relaxed DSR limits,
  • how credit cards are taken into account,
  • minimum living expenses,
  • credit rating classes,
  • risk appetite (banks take on different levels of risk).

That is why one bank may approve a loan while another rejects it, even with the same data. What to do after a refusal is covered in what you can do when a loan is refused for creditworthiness.

6. How can you check your own creditworthiness?

You can use our loan calculator or creditworthiness, which both simulate the way banks calculate it. On FinPortal, you can check this in a few seconds and get a realistic estimate of how much you can afford to borrow.

7. How can you improve your creditworthiness?

If you want to improve your creditworthiness, you can:

  • increase your income (for example through overtime or an additional job),
  • reduce your credit card limits or close unused cards,
  • improve your credit rating (for example by removing negative entries from banking databases),
  • extend the term of your existing loan obligations (loan extensions, lower annuity payments)
  • reduce your expenses (for example by cutting spending or eliminating unnecessary investments),
  • reduce your existing debts (for example by repaying loans or credit card debt),

Each of the above changes can have a positive effect on the calculation.

Conclusion

The calculation of creditworthiness is a combination of legislation, mathematical models, and banks’ internal rules. Even though the process may seem complicated, it can be understood well if you know the key elements: DSTI (DSR), living expenses, income, and obligations.

Because calculations differ from one bank to another, it makes sense to check your creditworthiness in advance. That helps you avoid surprises and increases your chances of approval. FinPortal’s creditworthiness calculator lets you get a realistic estimate in just a few seconds of how much you can afford to borrow, so you can walk into a conversation with the bank with confidence.