Many people are familiar with the concept of “loan”. In most families, at least one person borrowed money from financial institutions. But the borrower does not always adequately evaluate its capabilities, as a result of which delays and outstanding accounts arise. Failure to fulfill its obligations leads to a damaged credit history, which further minimizes the likelihood of approval of the next loan. In addition, the bank has the right to charge fines and penalties, they will have to be paid together with the amount and interest taken.
History tour
The history of lending began in the III century BC. e., in the territory of ancient Egypt. Then borrowed only in case of emergency, and if it is impossible to repay the debt, the borrower fell into slavery.
In Russia, money-lenders initially began to borrow money, they took high interest for their services, both peasants and impoverished nobles turned to them. Failure to pay such a loan could lead to a debt hole, and the peasants were forced to become life-time laborers.
In the XVIII century, the first state-owned banks began to appear, their loan interest was significantly lower than that of moneylenders, but not everyone could get the necessary loan there. Preference was given to the landlords and merchants. At the same time, the state banned private loans with profit on it. And only a century later, the Peasant Land Bank was opened , where ordinary people could take a loan to buy land from landowners.
What is a credit history?
Credit history is a person’s financial dossier. Every citizen who at least once took a loan or applied for it, but did not receive money, has it. What is a bad credit history?
Initially, if a person had no loans, it is zero. After receiving the first loan and successfully fulfilling its obligations, it becomes positive. If the borrower regularly delays payments or completely stops paying, his dossier deteriorates.
- The credit history stores information on all repaid loans and those that are currently available. The systematic collection of these data in Russia began in 2005.
- The credit bureau records all appeals to financial organizations and decisions on applications.
- The dossier also contains information about organizations requesting a review of CI.
- Each loan has detailed information on the amount of obligatory payments, their timely repayment and debt status.
- Additionally, the name of the citizen's full name, address of registration and residence, passport data and phone numbers are registered in the dossier.
- Sometimes KI also includes unfulfilled obligations on housing and communal services debts and alimony.
An organization can access credit history only with the consent of the borrower. And the consent is confirmed by a conventional or electronic signature.
Credit Bureau
As of July 2018, the state register of the Central Bank has 13 organizations engaged in collecting information on loans to Russians. The largest and most popular of them:
- NBCH;
- Equifax
- Joint Credit Bureau;
- "Russian standard".
The bureaus may contain incomplete information about all the loans of a person, because each banking organization cooperates with different institutions. Because of this, it may happen that the lender does not see any outstanding debt of the borrower. But all credit and microfinance organizations that have a state license are required to make changing information within 10 days from a specific moment.
Credit histories are kept in the bureau for 10 years after the latest changes.
How do I know if my credit history is corrupted?
Financial literacy in Russia is still low, and many borrowers do not know that they, like lenders, can find out their credit standing. This right is useful in order to understand the reason why lenders refuse a loan or to correct incorrect information.
Every person has the right once a year to receive his dossier for free. To do this, he initially needs to find out in which bureau it is stored. You can do this by contacting the Central directory:
- Having learned the required information, an individual can send a request via the Internet to the Central Bank using a special code acting as a pin code.
- The option of obtaining information through credit and microfinance organizations, credit cooperatives and notaries is possible. In this case, the provision of a subject code is not required.
Many banks and MFIs provide paid history services. This procedure can be repeated as many times as needed. In some credit organizations this is done through a personal account.
There are many online intermediaries who, for a fee, will help a person find out if he has a bad credit history or not. These sites perform the same function as banks: send a request, but they can not influence the current situation.
Causes of Corrupted CI
The financial reputation varies from different circumstances, and not all of them depend on the debtor. It is not necessary to be a malicious payer in order to have a damaged credit history. To fix it, you need to know the reason for the negative status:
- Failure to fulfill financial obligations is permanent long-term delinquencies and debts for which payment is not made at all.
- Frequent appeals and many loan applications in a short period of time. Banks consider a disturbing trend when a client constantly seeks money in debt, suspecting him of an unstable financial situation and an irresponsible attitude to money.
- Often, credit institutions do not even consider the borrower, if before that he was refused several institutions.
- Premature repayment of debt. Bankers receive interest on money borrowed, the faster the client repays the loan, the less benefit the other party will receive. Sometimes lenders consider this reason as the counterparty’s inability to calculate their finances correctly.
- Big credit load. For comfortable repayment of loans, an individual should not spend more than 30-40% of income on payment. Banks and MFIs check the real financial situation of the client, debt is negatively reflected in the credit history.
- Spoiled credit histories by banks. Usually, the human factor plays a role here - the manager of a financial organization forgot to transfer repayment data, did not write off the loan balance on time, etc. There are situations when bank employees made a typo in the name or passport data, after which the debt was written to an outsider.
Correction Options
In some cases, it is possible to correct a damaged credit history. What to do, the reason for the refusal will tell. But in any situation, the reputation will not recover right away.
- If the lender fails due to constant delays, you need to show your correction. This requires monthly payments to be made on time for at least six months. It is allowed to take a small loan and repay it on time, but not prematurely. Several of these loans will create positive momentum in bad credit history.
- The reason for many applications is solved simply - for some time it is better to refrain from applying to banking institutions.
- It is not recommended to repay long-term loans earlier than six months after processing. If you need a large loan amount, it is recommended that you initially take a small loan for a long term and pay it off according to the payment schedule.
- To reduce the financial burden, you should apply for refinancing loans to the organization providing such a service before delinquency.
- If the mistake was made by the bank, it is necessary to make a statement indicating the problem and send it by mail to the credit bureau. This organization will transfer the claim to the creditor, after which the issue will be resolved in favor of one of the parties to the contract.
How and where to get a loan with bad credit history?
There are a lot of financial organizations, all of them are fighting for customers, so sometimes they are ready to give relief to even borrowers with a negative credit history. Naturally, the reasons for this status play a decisive role. But you can almost always find an option.
So where to get a loan with bad credit history to a person who has problems with responsibility in relation to his obligations?
- Small and young bank. It is difficult for such organizations to compete with sharks of the financial industry; they are more loyal to their customers.
- Issuing a credit card. It is unlikely that a large limit will be approved, but having shown its reliability, over time you can expect to increase it. Banks have minimum requirements for applications for this product.
- Commodity loan. To apply, only a passport is required, and the credit history is checked by scoring, they will not be studied in detail.
- Microfinance companies also issue urgent loans to customers with a damaged credit history. The risk of default is inherent in their high interest rates.
- Credit brokers select a wide range of financial institutions and products, often they turn to private lenders.
Why bad CI is disadvantageous
Most often, a negative credit dossier due to delays and non-payment is formed among young people who are not serious about the possible consequences.
Sometimes the mistakes of youth can be harmful in the future. It is likely that, having matured and married, the newly-made husband and wife will want to purchase housing. You should not count on a mortgage loan with a damaged credit history, since the information on such applications is checked very strictly.
It will also happen in any unforeseen difficult situation requiring money - a large organization will not approve a loan.
There is a possibility that when applying for a job, the security service will not miss the debtor, especially if he applies for a leadership position or a place that gives access to financial resources.
The percentage of denial of insurance policies is high. An unreliable customer may simulate an accident or accident.
Caution, scammers!
In a situation where the debtor has tried everything, money is needed, and getting a loan with a damaged credit history does not work, there is a great risk of running into scammers who use illiteracy and a difficult situation.
Fraudsters will assure that they can make changes in CI, or they will offer to help with the approval of the loan, arguing that they have their own people in banks. Indeed, in some untreated situations, someone can influence the fact that the security service of a credit organization will close its eyes and let the debtor pass. But this means that the borrower with the same success can try it himself, without giving fabulous kickbacks.
In all other cases, when asked to send documents or pay money in advance, you should immediately stop the dialogue, or even better, report it to the police.
It is possible to get a loan with a damaged CI, but for this you will have to direct forces to correct it and wait. In the meantime, it is best to apply for money in debt to relatives who definitely do not require interest.