The concept of "credit history" today must be familiar even to those citizens who had never before been borrowers of financial institutions. But not everyone understands the essence of this concept, and, as a result, the country now and then there are signs of an irresponsible attitude to monetary obligations. Does credit history affect getting a loan? We will deal with this issue once and for all.
What is a credit history and BCI
First you need to understand the essence of the concept of "history of the borrower." Experts note that about half of the country's population have heard this term, and more than once, but do not understand its meaning and purpose of existence.
A credit history is a systematic data about a client of a bank who has ever resorted to lending services. The data indicated the borrower, his contacts, document numbers and other personal information, as well as information about the timeliness of making payments on the loan.
The data generated in the form of a personal card is transmitted by the bank to a specialized structure - the National Bureau of Credit Histories. The task of the NBCH is to store this information and promptly make changes when new information is received from the lender. All data received at one time or another is accumulated and provided at the request of banks or the borrower.
Types of Credit Histories
Before you ask yourself whether the credit history affects the receipt of a loan, it’s worth understanding the types of borrower stories. In contrast to popular belief, credit histories are not divided into 2 types - positive and negative, but into four.
1. An ideal credit history is information about a borrower who has not allowed a single delay in loans, both current and repaid. Such a client is a godsend for a financial institution. Banks are ready to provide a loan to such a borrower without information and at a reduced rate, since it guarantees minimal risk of debt default.
2. A good credit history is also a good option for a financial institution. This means that people allowed one-time or irregular missed payments for one or several days. So, in some organizations, a borrower with delays in repaid loans at any bank for up to a month may be deemed bona fide.
3. Bad credit history. Delay, which lasts 5-6 days or more, and also occurs regularly - this is a cause for doubt of any bank. For some particularly demanding financial institutions, the history of the borrower who has missed a payment for a period of 1 to 30 days, and the loan has been repaid in full in a timely manner, will be considered tainted.
4. Bad credit history is the most neglected option. This includes bad loans that the bank is ready to transfer to third parties, that is, collection agencies. As a rule, a loan is recognized as hopeless if there is a missed payment for a period of 90 days or more. The question of obtaining a loan in this case is no longer standing - it is simply impossible.
Is it possible to get a loan with a damaged credit history?
Technically, an unscrupulous borrower can also get a loan. The NBCH has several structural divisions; therefore, information is not always updated promptly or in full. Thus, it is not uncommon for a lender to become aware of not all the flaws of a potential borrower.
Does the credit history affect the receipt of a loan for the purchase of a car or apartment, if the borrower is declared unscrupulous? Of course, in such cases, one won’t have to rely on the bank's indulgence or careless verification of the NBKI data. Mortgages and car loans are major financial transactions, and in the current economic situation, banks are unlikely to take such a risk.
Who gives loans to borrowers with a tainted history?
Sometimes a bank consciously makes deals with an unscrupulous borrower or in principle draws up a loan without checking its credit history. This happens when a financial institution is interested in promoting a new service and provides small amounts to absolutely all customers. Interest rates and other conditions in such cases are recognized as not the most favorable.
A similar thing happens when you open a new bank. In an effort to form a customer base, the lender is loyal to every person who has applied for help, without looking back at possible previous sins.
Some citizens, looking for a financial institution that will cooperate with an unscrupulous client, turn their attention to loans. Credit history for microfinance organizations does not matter, but they compensate for their risks of non-repayment by predatory interest rates and commissions. In addition, such creditors are considered semi-legal, and sometimes even turn out to be scammers.
Is a lack of credit history good?
It turns out that not only a spoiled or positive credit history, but also its absence can influence the decision of the bank. If a future borrower has never before issued loans and made payments, then even the presence of proof of income cannot guarantee his liability and diligence. This is also a risky client for the bank.
Therefore, the absence of a credit history in the BCI can often be a decisive factor for refusal. How to be Experts advise starting to shape the story. To do this, you need to get a small loan without information. In accordance with the requirements of the bank, the client is guaranteed not to be refused.
Finally
Does credit history affect getting a loan? Of course! But the fact is that his story can affect the fate of the borrower both positively and negatively. A conscientious person has the right to rely on the bank's loyal attitude and favorable conditions. A borrower who spoiled his story can hardly hope for the condescension of a reliable financial organization, and indeed of any legal lender.