Does credit history affect loan acceptance and do you need to be a bonafide debtor?
With the concept of “credit history”, even those citizens who have never lent financial institutions before would be well-known today. But not everyone understands the essence of this concept, and as a result the country occasionally shows signs of irresponsible access to monetary liabilities. Does credit history affect borrowing? We will address this problem once and for all.
What is credit history and BCI?
First, you need to understand the essence of the concept of “debtor history”. Experts note that this term heard about half the population of the country and more than once, but does not understand its meaning and purpose of existence.
Credit history is systematic data about a bank client who has ever resorted to credit services. The data given by the borrower, his contacts, document numbers and other personal information, as well as information on the timeliness of payment of the loan.
Personal card information was transferred by the bank to a specialized structure – National Bureau of Credit Histories. NBCH’s task is to store this information and make changes immediately when new information is received from the lender. All data received at one time or another is collected and provided at the request of banks or borrowers.
Types of credit history
Before wondering if credit history for getting a loan is worth understanding the types of stories borrower. Contrary to popular belief, credit history is not divided into two types – positive and negative, but four.
1. The ideal credit history is data on a borrower who has not allowed a single delay in loans, both current and repaid. Such a client is a heavenly gift to a financial institution. Banks are prepared to provide such a borrower with no information and at a reduced rate because it guarantees a minimum risk of default.
2. A good credit history is also a good choice for a financial institution. This means that people have allowed one-off or irregular missed payments for one or several days. Thus, in some organizations, a borrower with outstanding credit repayments at any bank can be considered credible for up to one month.
3. Bad credit history. A delay that lasts 5-6 days or more and also occurs regularly – that is why there is any doubt about any bank. For some particularly demanding financial institutions, the history of a debtor who has missed a payment for 1 to 30 days and the loan has been repaid in full on time will be considered as damaged.
4. The history of bad credit is the most neglected option. This includes bad loans that the bank is ready to transfer to third parties, ie collection agencies. A credit is generally considered hopeless if a late payment occurs for 90 days or more. The question of obtaining a loan in this case is no longer topical – it is simply impossible.
Is it possible to obtain a loan with a damaged credit history?
Technically you can get a loan and unscrupulous borrower. NBCH has several structural divisions and therefore information is not always updated quickly or completely. It is therefore not uncommon for a creditor to perform not all the shortcomings of a potential borrower.
Does credit history affect the borrowing of a car or an apartment if the borrower is declared unscrupulous? In such cases, of course, he will not have to rely on leniency or careless verification of NBKI data by the bank. Mortgages and car loans are major financial transactions and in the current economic situation banks are unlikely to take such a risk.
Who provides loans to borrowers with a bad history?
Sometimes the bank deliberately trades with unscrupulous borrowers or basically draws a loan without checking its credit history. This occurs when a financial institution is interested in promoting a new service and provides small amounts to absolutely all customers. In such cases, interest rates and other conditions are considered the most favorable.
A similar thing happens when you open a new bank. In an effort to create a customer base, the lender is loyal to any person who has asked for help without looking back at possible previous sins.
Some citizens are looking for financial institutions to work with unscrupulous clients, turning their attention to loans. Credit history for microfinance organizations does not matter, but compensates for their risk of non-return through predatory interest rates and commissions. In addition, these creditors are considered semi-illegal and sometimes even become fraudsters.
Is the lack of credit history good?
It turns out that the bank’s decision does not have to be merely distorted or positive credit history, but also its absence. If a future borrower has never previously provided loans and paid, then even the presence of a receipt cannot guarantee his responsibility and diligence. He is also a risky client for the bank.
Therefore, the absence of credit in BCI frequent stories can be a determining factor in failure. How to be Experts recommend starting to shape the story. To do this you need to get a small loan without information. In accordance with the bank’s requirements, the client is guaranteed not to be rejected.