What is a credit limit?
A financing capacity or credit limit is a fixed amount of money that can be borrowed as needed (in full or in part), repaid and then borrowed again in a revolving credit arrangement.
Unlike a line of credit, you only pay interest when you have financing in place. If you don't use your financing capacity, you pay nothing.
This limit is defined by our underwriting policy, detailed in the next section 👇
How is my credit limit calculated?
Defacto uses various sources of data to feed the underwriting algorithm in order to define the limit of your borrowing capacity.
In general, there are 4 levels of data that Defacto uses:
Public data based on the company's registration number or VAT number
Company financial data provided by the borrower through access to their bank account or financial tools in real time
Historical loan and repayment data with Defacto
Peripheral data, e.g. presence on social networks, sales pipelines, etc.
We first check the legal existence and public data of the company, and then analyse the sources of financial data shared by the borrower.
If you are not eligible for our credit products, the financing capacity amount is €0.
Can I refine my credit limit?
Defacto's algorithm automatically reviews credit limits on a regular basis, and increases or decreases the available amount depending on recent financial data.
Therefore, more financial data our algorithm can integrate, the more complete its analysis, and the better we can predict your credit limit.
You can now share this new data with us directly from your Defacto account!
To do this, simply:
select the tool/bank account you wish to connect
accept read-only data sharing
follow the identification process
During the next review, our algorithm will take these new elements into account to recalculate your financing capacity.