Credit history – what is it + how to find out
Credit history is general information about loans and the discipline of their repayment by an individual. This includes loans from all banks, credit institutions and government agencies. There are data from insurance and leasing companies, as well as other financial institutions.
This information is submitted by various institutions regarding the same individual and can be used for a simplified credit rating system.
Credit history – what is it and how is it formed
The document is formed in chronological order by banks and microcredit organizations. Additional information may come from mobile operators or management companies, but this only applies to cases of systematic malicious non-payment. Lending operations enter the system according to a certain algorithm:
- the client’s appeal to the bank in order to receive a certain amount and filling out a questionnaire;
- receiving the desired amount or refusal;
- transfer of application data and application status to credit bureaus;
- recording data in a personal credit history.
To better understand what a credit history is, try to imagine the general base of financial institutions. Purchases, receipt of money to the account and other operations are available only to you, but the cash flows associated with borrowed money will be provided to both customers and various organizations from a common base.
The data is stored in the credit bureaus, the information is fully updated once a month. With the same frequency, the bureau calculates the personal rating of each client in order to predict its reliability for other organizations. Since there are several such bureaus and each organization cooperates with only one, it may be necessary to request information from several BCIs in order to collect complete information about their own data.
How to check credit history
Credit histories are not classified information, and each user can find out their own. It is these data that influence many life situations where the decision is made by higher authorities. The possibility of obtaining a loan, a loan, obtaining a mortgage, traveling abroad, applying for a job and other important points depends on the indicators provided in the reporting table. Therefore, it is recommended to find out all the information in advance. You can do this at a branch of your bank or at the borrower’s company, but since they only have information about their services, it is better to contact the BCI. In addition, there are many online services and mobile applications that provide the necessary information.
Algorithm for obtaining a credit history
Since data can be stored in different BCIs, you will first need to send a request to the Central Catalog of Credit Histories. And he will provide the necessary information. You can do this online by filling out the appropriate form on the Internet portal. All that is required is the code of the subject of the credit history.
Everyone who has at least once applied for a loan has a code and is spelled out in a standard contract. If this is lost, then it can be restored at the bank where the financial transactions were carried out or a new one can be created. Also, such a request can be made by telegram, the answer to which will be sent by e-mail.
The response from the Central Directory contains a list of BCIs where your data is located. Twice a year, every person has the right to receive a free report on the status of their financial debts. The report is provided in electronic or paper form. You can submit an application:
- on the bureau’s website by leaving an online application;
- by telegram to the physical address of the bureau, indicating the data of the passport and e-mail (your signature must be certified by the postal staff);
- by ordinary letter with the obligatory certification of the request by a notary;
- directly at the BKI office – a certificate is issued in printed form on the same day, a passport is required with you.
Data can be obtained through mobile applications, Internet services and bank branches where the loan was issued, if it cooperates with the declared BKI. Information about which companies, where information is transferred to, can be found on their hotline or directly in the BKI list.
Credit history – what’s next
When an extract is needed urgently or more than twice a year, it can be obtained for an additional fee. The procedure for filling out an application is no different from the free one, as well as the choice of a printed or electronic version and the method of submission.
The data is updated within five working days after the execution of monetary transactions. Therefore, if you have made any payments to improve your credit history recently, it is recommended to wait about a week for the latest indicators to be included in the report. The collected data is stored in the BKI 10 years after the last day of updating the information. Therefore, if during this time you did not have new debts, all information will be canceled and, according to your data, there will be nothing more in the CBI.
Why borrowers need a credit history
Borrowers credit history allows you to assess the solvency of a person, to predict the chances of successful repayment of the loan. With regular payments within the specified period, past loans repaid on time, the borrower provides a new loan, and most often on more favorable terms. If you have a debt in another bank, then a new loan will be denied not only in this institution. But also in others, since the chances of its repayment are estimated as minimal. Financial institutions insure themselves and prevent the option when a person takes large amounts of money in different places. And as a result, none of the payments provided can be paid.
These are the main reasons why you need a credit history. Not only banks and credit offices, but also insurance companies can request. This is due to the existing relationship between how a person pays off a loan and how he drives a car. Those who are late with payments or have serious delays are more likely to get into accidents, thereby bringing losses to insurance companies. Not only personality traits of optionality play a role, but also fraud. Many specifically arrange emergency situations in order to receive insurance payments to pay off debts. By requesting a credit report for life or car insurance, companies offer fairer policies and pricing terms to protect themselves. The same applies to car sharing centers – those who owe a large amount will be denied access to cars.
Why do individuals need a credit history?
Credit histories for individuals help to deal with the situation when you urgently need to take a loan and they refuse everywhere. When requesting data on past loans, it may turn out that there is an outstanding debt in another institution or payments from two years ago have not been closed.
The system reads such indicators as risk and unreliability, therefore it issues a refusal in a new loan. A person may not even realize that a negative decision is associated with a technical error in the BCI, past financial transactions and sorting through institutions, constantly resting on a refusal. Reviewing your payments and official records will help clarify and correct the situation.
In various disputable situations with collectors, conflicting points are clarified thanks to the data sent to the bureau. Here you can find out the remaining debt, the current status of the loan, as well as the grounds for claiming payments. With frequent fraudulent transactions, only a credit history allows you not to contact scammers.
And also find out if a loan has been taken in your name by other persons. If you suspect contact with swindlers, it is recommended to resolve issues in court, based on the data of bureaus and banks.
Another important point is when you are a guarantor or co-borrower. You may be denied a loan, even if you yourself have never taken them or have no debt. And if the person whose guarantor you are, has not paid the debt, has a large delay or is hiding from collectors. It is believed that the guarantor has almost the same responsibility to the borrower. Therefore, the presence of debt also characterizes him as an unreliable payer.
When applying for a job in specific organizations, employees can be checked through the BKI. These include:
- banking managers;
- government sector;
- large commercial structures;
- positions related to finance.
The presence of a large debt for these areas indicates economic illiteracy and the inability to manage financial flows. However, if there is a debt, but at the same time a person regularly deducts the required amount, this shows reliability and accuracy. Why a potential employer needs a credit history, you can either ask him or try to evaluate it yourself, depending on the characteristics of the position and organization. The presence of debt is not a decisive factor here. Many consider skillful interaction in the field of lending as a plus and are guided by human behavior in this topic.
There is another option why a credit history is needed for each user of banking and credit services personally. These are situations of ensuring your own peace of mind. If there are no debts, but there are refusals from enterprises, then you can check if there are any errors in the history itself and correct them. The request will also show whether we have issued a loan for you if you lost your passport (or TIN). Or when personal information is leaked.
What is a credit history document
The document is provided on a standard form or in an electronic format file of the specified sample. It must have the details of the organization that issued and contains both private and public information about the client. This is an official extract containing the client’s personal data. Namely: full name, passport details, TIN, place of birth and residence, contact phone number.
The document contains the following information:
- you are a borrower, co-borrower or guarantor of a loan;
- how many loans were taken, and for what amounts;
- loan applications, open and closed loans;
- how much more must be paid to the bank or institution-borrower;
- history of regularity and size of payments;
- delinquent accounts;
- registration of microloans and the purchase of expensive household appliances on credit.
In addition to basic information, separate sections contain data on the presence of penalties by bailiffs. Or evading the execution of a court decision to pay a debt. Each bureau creates its own mechanisms for calculating the client’s rating and can indicate the indicator in the general information. The higher this indicator, the higher the probability of obtaining a loan on the most favorable terms. Ratings of clients with insufficient payout indicators are blacklisted.
Getting into this list automatically blocks the possibility of receiving money, equipment, mortgages. And the person is blacklisted. The methodology for calculating the rating in each organization is different, so the data may not match.
In addition to debts on bank accounts, the form may contain arrears in utility bills, communication services and alimony. These data are rarely indicated and concern only persistent non-payers. The probability of obtaining a loan in such a situation is almost impossible due to the financial insolvency of the client. For this information to be included as a separate item, payment must be ignored for a long time. And additional loans.
The bank of credit histories has closed and open parts of the document. The closed one contains information about which organizations requested your data (only after written consent). Here are the dates and amounts of repayment or delay, details of the loan or refinancing. The information part shows where the client applied for a loan, the reason for refusal and cases of default. The information part can be requested without the consent of the client, but only for the issuance of the next loan.
Who can get a credit history
A complete report containing personal information can only be received by the client. And only after submitting a request, providing a passport or certified signatures. The main part and credit rating can be requested by a bank, an MFI, a potential employer. Or an insurance and car sharing company. In such situations, they should indicate why a credit history is needed. And obtain your written consent to the data request.
Information part, i.e. places where they applied for a loan, the reason for refusal and non-fulfillment of obligations without obtaining written consent can only be requested by a legal entity. This rule applies only to cases of issuing a loan or other amounts as a loan.
Relatives and family members cannot obtain this information without court permission. Moreover, a notarized petition of the person himself. Even in the event of death, an appropriate decision and a collected package of documents are required.
Good credit history
Each organization’s requirements for data on loans and payments are different. The bank issuing the loan will prioritize completely different indicators than the employer at the interview. It is important what a credit history is for them – an indicator of solvency, personal qualities or the presence of debts.
Accurately, a credit history should contain loans that a person periodically takes and systematically, carefully repays. For banks and microcredit companies, this indicator will have an advantage over the complete absence of loans from a person.
Having an outstanding loan is not always a problem. If there is a systematic payment of the required amounts in the specified periods. In such a situation, the client is also considered as financially reliable. And they can open another loan, possibly reducing the amount.
Financial companies consider it a sign of reliability if there are no records of systematic delays in payments. Or delays for a long period. If three times a year you are late with the payment of the amount by a couple of days, it is not critical. And this cannot be a reason for refusal. But various insurance companies will prefer that you not be in the BKI database at all.
Mistakes in credit reports and how to fix them.
When a person thinks that all his debts are repaid, and the document indicates otherwise, it is very likely that some kind of mistake has crept in. A possible reason could be that the history was requested too early. And the data on the latest payments has not yet been updated (this takes up to a week). Employees can also make a mistake, forgetting to send information, making a typo – check the data.
When the loan is repaid and the credit card is not closed, the bank continues to charge a service fee. From such small amounts, debt gradually grows, which you may not know about. Therefore, after repaying the loan, all cards are recommended to be canceled immediately.
Also, when closing a loan, there may be a small amount for a commission or insurance. Maybe you just weren’t notified. If the card is not tied to notifications by mail or SMS, then you can safely forget about it. And assume that everything is in order. As a result, the authorities will issue information about the debt or late payment. Even if the amount of debt is a penny.
The program does not issue the amount of the debt. She informs the authorities about the fixed debt and the delay in payment obligations.
Identified errors must be corrected in the bureau itself, where the history is stored. To do this, you should write an appropriate application, and then wait for confirmation of the error from the bank or MFI. After receiving confirmation, the bureau corrects the data in the history, if this is not received, then the issue must be resolved in court.
How to improve credit history
It is impossible to change the data in the archive. Therefore, if you have a bad credit history, but you still need loans, you will have to improve it gradually. You cannot just close the last debt and expect it to improve the situation. Because when the bank asks for information, the last thing it will see is delays, debts and other shortcomings on an already closed loan.
The strategy of taking new small loans and repaying them systematically is a winning one. Banks are reluctant to lend to clients with a bad history. In order to re-convince them of their solvency, it is necessary to present an official certificate from the place of work. Which guarantees solvency, as well as documents of ownership of housing.
If banks and credit companies continue to refuse, it is recommended to apply for a loan online. Companies like this just make it easier to approve loans to people with a bad history. Because it’s part of their business. Comfortable crediting of money within half an hour around the clock and a low interest rate are the advantages of the service.
If you take a loan for equipment or a car, use mini-loans, get a credit card for daily expenses, then the picture gradually levels out. Close attention is paid to the last few years and recent operations. Therefore, if you take small amounts for at least a couple of years and pay them off on time, then you can get out of the BKI black list in a short time.
The bank of credit histories will gradually record timely payments, repaid loans and change the rating. Reputation depends on the ratio of violations of payments and accurate repayment. Therefore, by increasing the number of closed loans on microcredits, it is possible to change the entire credit history in a short time, raising the rating and leaving the black list.
While improving your reputation, it is important that there are no debts in other areas. Those who are blacklisted by banks and credit companies are monitored not only for the selected loan. But also insurance policies, because. cases of intentional accidents were recorded in order to obtain money. Debts on utility bills and cellular communications are taken into account as indirect indicators of the unreliability of the client. Only careful payment of bills for several years and microcredit will help change the rating.