How credit works in Croatia

The system of credit in Croatia is pretty simple. A bank determines your creditworthiness based on a set of criteria. If you are found to be creditworthy, you are granted a line of credit.

There is no master credit grading “system” that tracks everyone from birth and follows them around throughout their life like in the United States. Your creditworthiness (called “kreditna sposobnost”) is only based on your income and debts at the time of application.

In this post, we cover:

• How your creditworthiness is calculated in Croatia
• How your income is determined
• The role of a guarantor payer
• How banks handle foreigners who want credit
• How to get a mortgage loan

The facts are these…

How credit works in Croatia

How creditworthiness is calculated in Croatia

Creditworthiness is calculated on a case-by-case basis. Each bank evaluates potential credit clients on their own merit at the time of application using their own set of criteria.

Every Croatian bank has its own terms, conditions, and requirements. These terms are not affected by the type of credit product, but rather your ability to pay it back. [Read: Croatia’s banks that offer mortgages and who they will consider for a loan]

For a lender to calculate creditworthiness, individuals must provide certain documentation to the bank. Every bank has its own list of the documentation that they require when considering your line of credit application.

Once this documentation is delivered to the bank, the bank can make its decision on your creditworthiness.

To calculate the creditworthiness of potential clients, Croatian banks usually use the following information:

• Amount of regular monthly incomes (salaried income)
• Amount of additional earnings (non-salaried income)
• Amount of savings and shares in investment funds
• Existing credit obligations, i.e. the amount of current indebtedness
  • Current loan balances
  • Credit card debts
  • Current account overdrafts
• Employment status
• Proof of employment (other than proof of salary payments)
• Number of dependents, i.e. household members supported under this income
• Marital status
• Potential obligations of the guarantors (co-signer)
• Whether the potential client is a current user of the bank’s services

Again, the required information and documentation will depend on the certain bank.

How your income is determined

A person must have an available amount of monthly income to repay the credit on a monthly basis and cover their other recurring expenses.

Your monthly income may include:

• Salary
• Transportation fees
• Child allowance from the government
• Alimony
• Rent earnings
• Terrain fees (which refers to compensation for working outside of the office)

The amount of monthly income can be proven using:

• Payroll lists – for employed persons
• Certificate from HZMO – for retired persons
• Proof of income or receipts – for owners of obrt (trade businesses)
• Other documentation on earnings, paid taxes, and contributions

The role of a guarantor payer

To get credit approval from a certain bank, it is usually mandatory to have a person called “jamac platac” (guarantor payer). In the US, we refer to this as a co-signer. The guarantor is obliged to pay your unpaid loan obligations in the event you are unable to.

This role is very risky, since the guarantor may very well be held liable for the debt if the primary on the loan defaults. Croatians commonly have a family member sign-on as the guarantor.

If you accept the role of the guarantor, keep in mind that the bank doesn’t care who will pay for the debt. The bank is focused on the settlement of the debt based on the agreement, no matter who will repay them – the debtor or the guarantor.

How banks handle foreigners that want credit

As a rule of thumb, most Croatian banks prefer to extend credit to foreigners who hold permanent residence in Croatia. By permanent residence, we mean you’ve been here at least 5 years with temporary residence then applied and were granted permanent residence. [Read: How to transition from temporary to permanent residence]

It all depends on the type of credit you are looking for. Credit cards are easier to get as a foreigner. Mortgages are much harder.

For large lines of credit such as a mortgage loan, Croatian banks want to see that you are receiving a regular income into your Croatian bank account. [Read: How to get a mortgage loan in Croatia]

Some banks will extend credit to a foreigner if they have been receiving a foreign income on their Croatian bank account monthly for at least 1 year. Some banks will only deal with Croatian and EU/EEA citizens. Some banks won’t deal with foreigners at all for mortgages.

It all depends on the bank. In the experience of our readers, the most foreigner-friendly banks are the ones owned by companies outside Croatia like Erste and Raiffeisen.

Check out our detailed comparison of the biggest banks in Croatia here.

How to get a mortgage loan in Croatia

If you are specifically interested in getting a mortgage loan, we recommend reading up on how the process works in Croatia first. We have some resources that will prove useful:

• How to apply for a mortgage loan in Croatia
• 11 things to know about getting a mortgage in Croatia

Once you’ve done that research, look into getting offers from a variety of banks. Start with the biggest banks listed in our detailed bank comparison.

Make sure you also check with Wustenrot. While they are not one of Croatia’s biggest banks, they are foreigner-friendly. Also check with smaller local banks, as they have been known to have more favorable rates.

Lastly, come back and share your experiences with us! We want to hear from you.

View our other loan articles

• 11 things to know about getting a home loan in Croatia
• Croatia’s banks that offer mortgages and who they will consider for a loan
• Croatia’s biggest banks: Comparison of fees and services
• Government grants and loans for entrepreneurs in Croatia
• How to get a mortgage loan in Croatia