With the term “credit history” today, even citizens who have never been borrowers from financial organizations are familiar. But not everyone understands the essence of this concept. As a result, there are signs of an irresponsible attitude towards monetary obligations in the country. Does the credit history affect a loan? We will deal with this topic once and for all.
What is credit history and CII?
First you need to understand the essence of the terms “borrower history”. Experts note that around half of the country population has heard this term more than once, but its meaning and purpose are not understood.
The credit history is systematized – data about a bank customer who has ever used credit services. The data give the full name. the borrower, his contacts, document numbers and other personal information and information on the timeliness of payments for the loan.
The bank generates data generated as a personal card in a specialized structure – the National Bureau of Credit Histories. The NBCH’s role is to store this information and make changes immediately when new information is received from the lender. All data received at a specific point in time or at another point in time is collected and made available at the request of the banks or the borrower.
Types of credit history
Before you wonder if credit history for a loan, you should understand the types of borrower stories. Contrary to popular opinion, credit histories are not divided into two types – positive and negative, but four.
1 An ideal credit history is data on a borrower who has not made a single repayment on a loan, nor has it made an ongoing repayment. Such a customer is a stroke of luck for a financial institution. Banks are ready to legend to a similar borrower without reference and at a reduced interest rate as it guarantees minimal default risk.
2 A good credit history is also a good option for a financial institution. This means that individuals have allowed one-off or irregular defaults for one or more days. In some organizations, therefore, a borrower with delays in repaying loans from a bank for up to a month may be recognized as good.
3. Corrupt credit history. A delay that lasts 5-6 days or more and also occurs regularly – this is the reason for doubt at every bank. For some particularly demanding financial institutions, the history of the borrower who missed a payment of 1 to 30 days is considered to be faulty, and the loan is paid back in full in good time.
4 Bad credit history is the most neglected option. This includes non-performing loans that the bank would like to pass on to third parties, that is, debt collection agencies. The loan is generally considered to be hopeless if a missed payment is received over a period of 90 days. In this case, the question of a loan is no longer worth it – it is simply impossible.
Is it possible to get a loan with a damaged credit history?
Technically, a loan can be unscrupulous and borrower. NBCH has several structural breakdowns so that information is not always updated promptly or completely. Therefore, it is not uncommon for the legend to fail to perceive all of a potential borrower’s shortcomings.
Does the credit history affect a loan – buying a car or apartment if it turns out that the borrower is unfair? In such cases, it is of course not necessary to rely on the bank’s leniency or negligent verification of NBKI data. Mortgage and auto loans are important financial transactions, and in the current economic climate, banks are unlikely to take such a risk.
Who lends to borrowers with a spoiled history?
Sometimes the bank deliberately makes uncorrupt business borrowers or basically makes a loan without checking the credit history. This happens when a financial institution is interested in promoting a new service and makes small amounts available to all customers. In such cases, interest rates and other conditions are not considered to be profitable.
The same thing happens when you open a new bank. In an effort to build a customer base, the lender is loyal to anyone who has asked for help, regardless of possible sins.
Some citizens looking for money institutions that work with an unscrupulous customer are turning their attention to loans. The credit history for microfinance organizations doesn’t matter, but they compensate for their non-return risks through extortionate interest rates and commissions. In addition, such lenders are considered semi-legal and sometimes even prove to be fraudsters.
Missing credit history – is that a good thing?
It turns out that the bank’s decision may not be affected only by a damaged or positive credit history, but also by its absence. If the future borrower has never made loans or payments, even the existence of an income confirmation cannot guarantee his responsibility and performance. This is also a risky customer for the bank.
As a result, there is often a lack of credit reporting agencies. Stories can be a crucial factor in failure. How to be experts advise to shape the story. To do this, you need to issue a small loan without references. If the bank’s requirements are met, it is guaranteed that the customer will not be rejected.
Does the credit history affect a loan? Naturally! The fact is, however, that its history can affect the borrower’s fate both positively and negatively. A conscientious person has the right to rely on the bank’s loyalty and favorable conditions. A borrower who has spoiled his story can hardly hope to enjoy a reliable financial institution and even a legal creditor.