Wanting to get consumer loans, customers often face bank failure due to poor credit history. For most borrowers, this means a negative decision in 9 out of 10 attempts to take a loan. Those who are not going to give up the opportunity to obtain borrowed funds should know how to improve a damaged credit history.
Borrower rating: how is it formed?
After applying for a loan, managers contact the BKI - Bureau of Credit Histories. The organization collects and analyzes information about payers. All information is generated by a scoring assessment of the client.
Data is analyzed for a specific period of time, for example, 2 years. If the payer for the specified period allowed delays, its rating in the BKI decreases by several points. Specialists from the Bureau of Credit Histories receive information from all financial organizations involved in loans.
A low rating is one of the main reasons for refusing a loan. Information about non-payers is stored for years: the period for updating data in the BKI takes at least 5 years. If the borrower is in dire need of finance, he should try to improve his credit history as quickly as possible.
Information in the BKI: can there be errors?
Information portals consolidating data on payers and their relations with the bank operate on the basis of Federal Law No. 218-FZ “On Credit Histories”. The information transmitted by the lenders is automatically processed and verified by the experts of the analytical department.
But even in the largest centers, for example, the National Bureau of Credit Histories, errors periodically occur. The consequence of incorrectly transmitted information by the bank is the refusal to issue a loan to the client on the basis of a poor rating of the borrower.
Errors can be associated with incorrect input of the payer data (for example, when writing the name, age or date of birth) or a technical failure. In the first case, borrowers who are confident in their trustworthiness must apply to the BCI with a statement on entering relevant information.
In the second case, customers can not worry about how to improve their credit history: the information center, after troubleshooting, will send new information to the bank.
How to find out information about the rating of the payer?
In case of numerous refusals in obtaining a loan due to a bad credit history, the borrower can apply for reference information both to the BCI and to the bank.
According to Law No. 218- On Credit Histories, a borrower has the right to order an extract from one of the bureaus once a year for free. It is recommended to contact the largest centers: "NBKI", "Equifax", "Russian Standard", "United Credit Bureau".
Banks also provide information services to borrowers. For example, in Sberbank in online banking, customers can independently order a paid statement from BKI. The service is called “Credit History”.
What does the information from the BKI include?
Before trying to apply for a new loan, hoping for a loyal attitude of a financial organization, the borrower must know what the credit history includes.
Having information from the BKI and knowing information about relations with banks and other lenders, the payer can easily determine how to improve the credit history in Sberbank, VTB, Sovcombank and other financial institutions, for example, microfinance organizations (MFIs).
The borrower rating consists of several indicators:
- the number of current and repaid obligations;
- amount of debt;
- the presence of late payments;
- information on early amounts paid;
- information about the payer (age, region of residence, gender).
How to improve credit history if it is damaged: tips for borrowers
Based on the data on rating formation, payers can improve relations with banks within six months. It is recommended to increase the chances of getting a new loan using the following options:
- Repayment of existing loans.
- Refusal from early write-off of loans.
- Active use of a credit card as a means of payment.
- Making an installment loan.
- Getting microloans to improve your credit history.
- Planned increase in loan commitments.
Existing and repaid loans and their impact on credit history
Information on loan agreements is the most important in the rating of the borrower. Banks, receiving data from the Bureau of Credit Histories, primarily pay attention to the number of repaid loans.
The presence of three or more active loan obligations reduces the solvency of the client. All loans are taken into account, especially for large amounts: from 250,000 rubles and more.
The easiest way to improve your credit history is to get rid of existing obligations. Repayment of contracts on time will not only increase the solvency of the borrower, but also allow him (if necessary) to issue a new loan on favorable terms.
Advance payments: why do banks have a negative attitude to quick repayment of a loan?
Knowing how to improve your credit history when paying existing obligations, it is not recommended to make payments ahead of schedule. Overpayment affects the change in the terms of the loan agreement.
Payments made in an amount exceeding the monthly installment are considered early payments. Depositing funds above the recommended value reduces the amount of loan debt.
Banks do not receive part of the profit from interest, so the rating of the borrower is reduced. Clients who repeatedly borrow funds from a financial institution and repay a loan within three months after registration are deprived of the opportunity to obtain approval in the future.
The presence of 1-3 early write-offs for amounts not exceeding the size of the monthly installment by more than 300% will not have a serious impact on the credit history of the borrower. If the client wants to improve his rating in the BKI, it is recommended to pay off existing obligations without interfering with the change in the payment schedule.
Of course, early repayment in calculating points at the Bureau of Credit Histories plays a lesser role than the presence of delinquencies, but BKI analysts do not recommend abusing the bank’s trust. Cases when clients issued a mortgage loan and immediately repaid it, almost without overpaying a financial organization, 90% deprive borrowers of the opportunity in the future to obtain a target loan from this bank.
Grace period - the borrower's assistant in the restoration of the rating
One of the effective and non-banal ways to improve a credit history, if it is damaged, is activity on a card with a bank limit. As an assistant, a credit card or debit card with an overdraft can be used. The advantages of the option are the absence of a commission and the opportunity to receive bonuses of the issuing bank.
How it works? When making purchases with a credit card within the grace period, the payer theoretically takes an interest-free loan. It is not necessary to spend the entire limit: it is enough to make an expense in the amount of 1000-3000 rubles within 2-5 days and pay the debt during the grace period. When shopping, even for a small amount, a new financial obligation is opened, and for the entire loan balance on the card.
Non-cash payment is beneficial for the bank: the issuer receives a commission through acquiring. In addition, most credit organizations reward owners for payments through the terminal by accruing bonuses or cashback (by returning a certain percentage of the spent funds) to the card. Examples: the bonus program "Thank you from Sberbank", credit cards with cashback at the banks "Russian Standard", "Tinkoff".
The disadvantage of this method is the high interest rate on credit cards. If the client did not manage to make all the money spent during the grace period, he is obliged to pay a commission to the bank in the amount of 19.9% to 33.9% per annum.
Installment plan: "hidden" loan on favorable terms
The purchase of household appliances, fur products and mobile phones without initial capital has already become a familiar process for Russians. Cellular salons, shopping centers, boutiques are actively promoting the possibility of receiving goods without having money in your pocket: it is enough to place an installment plan to enjoy a purchase without overpayment.
By installments is meant the design of an interest-free loan on goods. The size of the monthly payment is set according to the campaign held in the company. For example, a visitor wants to purchase a cell phone in installments. For a store’s stock, a loan without overpayments is provided only according to the “0-0-24” scheme, which means there is no interest when applying for installments for 24 months (0 rubles - the first installment, 0% - the amount of the overpayment).
Companies offering to buy goods by installments cooperate with certain creditors, for example, Setelem, Home Credit, and OTP Bank. Stores profit from the sale of goods, and banks - from the commission received. Interest on installments is paid by the store. For the client, this method is an excellent opportunity to combine the long-awaited purchase and correction of the situation with loans.
But not all types of installments represent the conclusion of an interest-free loan agreement. Can I improve my credit history without getting a loan in the store? Unfortunately, installment payment in the form of regular installments to the seller’s account without a loan agreement is not a way to fix relations with banks.
Appeal to MFIs: how microloans are useful
Debt liabilities have the greatest impact on the rating of the payer, so microloans are a proven way to improve your credit history.
Firstly, microfinance organizations are more loyal to borrowers. Unlike demanding banks, MFIs grant loans even to customers with arrears and without official income.
Secondly, loans that improve credit history are issued in small amounts: from 1,000 to 10,000 rubles. This minimizes the risk of non-refund.
Thirdly, information from MFIs is transmitted to all Bureau of credit histories. Thanks to the established system of data consolidation, all financial organizations that make requests to the BKI when submitting an application will learn about the increase in the client rating. This is the fastest way to improve the credit history in Sberbank, the country's most demanding lender. However, this is not all.
How to improve credit history with microloans?
The process of rating gaining in BKI using microloans consists of several stages:
- Choosing a lender. It is recommended to pay attention to companies with a minimum interest rate on loans and positive customer reviews.
- Product selection. Sometimes MFIs themselves tell payers how to improve their credit history by offering special types of loans.
- Filling in the questionnaire. 8 out of 10 financial institutions are required to enter contact information, information about income and liabilities.
- Choosing a method of obtaining funds. The most popular is the transfer to a bank card, then - online wallets, accounts, mobile phone and money transfer systems.
- Awaiting MFI decision . Microfinance institutions are not in vain positioning themselves as "instant loans." The average time for considering a loan application does not exceed 20 minutes. If approved, funds are credited to the client from 10 minutes to 24 hours.
- Repayment of a loan. Having received a microloan, it is recommended to pay obligations at the end of the loan term: MFIs will receive a profit on interest, and the payer will improve the credit rating.
Growth in loan commitments: what could it lead to
Customers who regularly issue consumer loans in 90% of cases increase the amount of liabilities with each subsequent loan. This is another way to improve your credit history.
But to approve the amount in excess of the previous limit, the solvency of the borrower should not be in doubt with the bank. This option is suitable only for those who allowed a loan delay of up to 10 days no more than 5 times.
Variety of loan products as proof of solvency
If you have the financial ability, it is recommended not only to increase the loan amount, but also to change the type of product. For example, instead of a regular loan, apply for a loan against a guarantee. Secured loans are approved 33% more often than other applications.
If there is no need to overpay for an increase in the loan limit, you can alternatively order a credit card with the desired amount and use the grace period.