When making a decision by a financial institution regarding the issuance of a loan, a package of documents provided by a potential borrower is analyzed. But recently, more and more often there are situations when the borrower's income and his financial situation satisfy all the requirements of the bank, and the client is still refused by application. An employee of a credit institution motivates this decision with a bad credit history of the borrower. In this case, the client has quite logical questions: when is it reset and can it be fixed.
Due to the low level of financial literacy, citizens often do not know how many years poor credit history has been kept and what are the ways to improve it. It should be noted right away that ruining it is much easier than restoring it. Therefore, it is worth initially doing everything to maintain your reputation with banking organizations.
What is a credit history?
This information is about loans earlier received by the borrower, as well as about the performance of debt obligations. Many borrowers who have a problem with approving an application at the bank are interested in how long a bad credit history is stored. This information is stored in the BCI for ten years. The activities of the bureau are controlled by the Central Bank.
As for the question, what caused the bad credit history and when it will be reset to zero, it should be noted that no one can delete it ahead of time. It can only be improved in order to increase the chances of obtaining new loans in the future.
How to find out your story?
In the event that the borrower, by all criteria, meets the requirements of banks, but still receives constant refusals, it makes sense to familiarize yourself with your story. You can do this as follows:
- On the official website of the Bank of Russia. First you need to find out the code of your history (you can get it at a credit institution), and in the section “Catalog of credit histories” enter your code and get acquainted with the information.
- By contacting the bureau directly. To do this, the borrower needs to send a request through the Central History Catalog. After receiving information about which particular bureau this information is in, you must contact directly there.
- Through various online resources that collaborate with the Bureau. But this method is not reliable. Sometimes those who are interested in the question of why a bad credit history arose and when it will be reset to zero are willing to pay for receiving information and making positive changes to it. This is what scammers use. Collecting money from users, they no longer get in touch, and information about the credit past remains negative.
Do I have to pay for information?
The law established that there is the possibility of free information once a year. Thus, you can find out why a bad credit history arose and when it will be reset to zero, on the basis that the data has been stored for ten years.
If it is necessary to receive such information more often, then such a service becomes paid. It is best to contact the official partners of the BCI, rather than trying to get information through questionable services on the Internet.
Bad credit history: the reasons for its occurrence
Among the main reasons can be noted:
1. Overdue payments on previously received loans. Delays arise in case of untimely payment of a loan. Financial institutions take the issue of timely repayment of a loan very seriously. Sometimes delay even for one day can significantly spoil the reputation of the client.
As practice shows, a delay of up to 5 days is considered a serious violation. Of course, it is necessarily reflected in the credit history of the borrower. But such a violation, as a rule, does not have a serious impact on the subsequent issuance of loans. Repeated overdue payments for a period of 5 to 35 days can already really have an extremely negative effect on history. You should carefully monitor the amount paid. Sometimes when repaying a loan, clients do not take into account the remaining pennies. But the bank can fully consider them late.
In addition to the fact that late payments negatively affect the credit history, they still accrued increased interest.
If a situation arises of the impossibility of timely repayment, be sure to notify the bank in order to change the payment schedule. In some cases, banks can meet the customer.
So that over time, the question of why a bad credit history arose and when it was reset, did not become a headache for the borrower, it is important to be responsible for the performance of your debt obligations.
2. Unpaid earlier loan. Complete loan repayment has an extremely negative effect on history. With such a fact, the vast majority of credit institutions simply refuse to lend.
3. Errors. The human factor can never be ruled out. Sometimes a bank employee may make a mistake when entering information in the database (incorrect amount or date). Or problems may be due to a delay in making payments. In such a situation, you should contact the bank so that the employee carefully checks everything and makes sure that the borrower is in good faith.
4. Fraud. Sometimes criminals draw up loans and borrowings using other people's documents, especially microfinance organizations. A person learns about a bad credit history when he receives calls from the bank.
5. Litigation against the borrower. In the event that a criminal case has been instituted against the client, for example, in the case of non-payment of alimony or utilities, this fact will certainly be reflected in the credit history.
MFC loan
The question of how to fix a bad credit history is becoming increasingly relevant for modern bank customers. So that in the future there is the possibility of obtaining loans from banks, it is necessary to address the issue of correcting your reputation.
The most common way is to receive many small loans and repay them in a timely manner. If the credit history is not completely corrupted yet, in some cases a loan can be obtained from a bank. But, as practice shows, a financial institution will certainly refuse an unscrupulous borrower. Therefore, in this case, loans from the MFC become a real salvation. A microloan with a bad credit history is sometimes the only chance to correct the situation.
Today there are a large number of microfinance organizations that do not attach much importance to the past of the borrower. The services of such companies are most appropriate to use dishonest customers.
If the borrower takes loans from microfinance organizations and repays the debt in a timely manner, then this information is reflected in the history. Thus, it is gradually improving. After several such agreements, the borrower may get a chance to approve the application already at the bank. However, making a microloan with a bad credit history in order to improve it has a significant drawback: despite the simplicity and speed of receipt, the client is forced to pay a large percentage.
Loan processing in the shopping center
In addition, a loan can be obtained, for example, in a shopping center. Such points for the issuance of loans, as a rule, are not interested in the history of the borrower and quickly arrange a loan. You can take out a loan on inexpensive household appliances or digital appliances. This will allow to correct the credit past and replace the old refrigerator or give a new smartphone to a loved one.
Intermediary services
Now on the credit market there are many brokers who can provide assistance in this situation. In the event that a microloan cannot be obtained, intermediaries can really help, even if a bad credit history a year ago did not have a chance of correction. Their services, of course, are paid (a certain percentage of the amount of debt). However, this method cannot be reliable: many intermediaries use illegal schemes and methods to correct information.
But still it’s better to take care of correcting your story in advance. Indeed, many rejected customers already know what a bad credit history means for a bank. Therefore, when the borrower realizes that it is not able to repay the debt on time, it is necessary to contact the financial institution with a statement on the restructuring of the debt. The bank can meet it because it is interested in receiving back the amount provided to it taking into account interest.
But the main way to correct history is to pay current debt on time.
Advice to borrowers
To avoid deterioration in credit history, it is advisable:
- During the repayment of the loan to collect all certificates and checks.
- Find out the exact amount remaining until the loan is fully repaid.
- After the debt has been fully repaid, take a bank statement confirming this fact.
- In case of loss of a passport, it is mandatory to inform law enforcement authorities.
- If it is impossible to timely pay, notify the bank about this. Evidence of this may be required, such as sick leave.
- Make all payments on time.
- Do not take loans, the overpayment for which is too large and may have a significant impact on the financial situation of the borrower.
- Check your history at least once a year.
Conclusion
Thus, one cannot turn a blind eye to the problem of bad credit history. In the future, it can result in serious trouble. The statute of limitations of a bad credit history is 10 years. But, as practice shows, you can fix it. The most popular way is to take loans from microfinance organizations. But this is not a quick process, it can take more than one year. Therefore, be patient. But the main thing is to use only legal methods. All illegal attempts can be disclosed, which in the future will lead to the complete impossibility of borrowing funds from banks.