How not to spoil the credit history? Bank credit can help out in many situations. But just because banks do not hand out money. Taking a positive decision on granting a loan, bank experts evaluate not only the solvency of the borrower, but also its reliability. Therefore, if a potential borrower had at least one small incident on a bank loan, this may affect the final decision of the bank to issue the next loan.
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It is a mistake to believe that if you do not work out with one bank, you can go to another, where you will be treated differently. All banks act according to the same rules, and the mechanism for deciding whether to grant a loan is also similar. However, the most important thing is all information relating to borrowed funds, i.e. on loans, overdraft and guarantee, transferred to the credit bureau.
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Credit score contains data on the outstanding balances of individuals, including information on overdue debts. Thus, the credit history reflects the total debt to the bank, as well as data on all overdue payments.
As a result, even a small delay in the payment of principal or interest on a loan can be a stain on your reputation for the rest of your life. Of course, this does not mean that any negative fact in the credit history will mean that the loan can no longer be seen. The decision in each case depends on the policy of the particular bank, the seriousness of the breach of contract, and the type of loan. If you are applying, for example, for a real estate loan or a car purchase, there is a chance that even a small delay in payment may become a reason for refusal. At the same time, when deciding on a consumer loan, a bank can turn a blind eye to minor sins in the past and issue a loan, especially if the borrower’s official salary is at a satisfactory level.
By the way, data not only about borrowers, but also about guarantors flow to the credit bureau. Therefore, before you act as a guarantor, it is worth weighing the pros and cons. Subsequently, the unreliability of the ward for whom you vouch can also serve you badly if you decide to take a loan yourself.
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If there is no credit history, you should not expect that you will be given a loan unconditionally. For the bank, this may be evidence that you have applied with earlier, but for one reason or another were refused.
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Information on credit history is available not only to banks, but also to ordinary citizens. To check your credit history, it is enough to apply with an identity document to the branch of the National Bank, after which you will be provided with all the data. Usually this procedure does not take much time and is provided free of charge once a year. Subsequent requests will cost a small fee and take a little longer.
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Thus, thanks to the credit bureau, the bank is able to obtain general information about the borrower, assess its solvency and reliability, as well as weed out doubtful borrowers. This allows the bank to more quickly check the customer information when making a decision on granting a loan. In addition, due to the fact that most of the data is already available in the credit bureau, the list of documents is reduced when a loan application is made.
The bank considers not only clients who have overdue loans, but also citizens younger than 18, in some cases – 21 years, and over 65 years, to unreliable borrowers. It is almost hopeless to ruin the reputation by providing false information in the loan application.
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Nevertheless, even the most conscientious borrowers sometimes have late payments. The most common reason is late payment delivery. For example, if you pay through Belpochta, money can go to the bank for more than a day. As a result, the payment will arrive later, and your credit history will be forever corrupted. To avoid this, it is better to deposit money to repay the loan in advance, at least 2-3 days before the expiration date. If you still make a payment on the last day, it is necessary to do so at the cash desk of the bank itself, then you can definitely avoid the delay.
Also, in order to make payments on the loan on time, it is worth properly allocating the credit burden. Sometimes it makes sense to take money for a longer period, however, reduce the monthly payment and thus avoid arrears.
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What to do if there is already a dark spot on the reputation of the borrower? Even then, the situation is not entirely hopeless and you can count on a loan, but perhaps on less attractive terms.
Most often, the exit for such borrowers can be express loans, which today offer many banks. The disadvantage of such lending is a high percentage, however, banks, as a rule, are very loyal to customers who want to receive “quick money”. Also, if the bank doubts the reliability of the borrower, it can make a positive decision on the same loan, but offer more stringent conditions, including a higher interest rate.
Another option is to apply to the credit union, which provides loans quite legally, regardless of the borrower’s history. Rates in such organizations are set for a month and, as a rule, higher than on bank offers by 5-10%. However, the overpayment is quite comparable with express loans.
In addition, today such a service as a pawnshop is actively developing on the financial market. Most often, the collateral is either transport or real estate. Banks also provide such services, but they will in any case be interested in your credit history. Pawn shops are ready to give money, regardless of any sins in the past. You can calculate the amount of up to 70% of the value of the collateral at 7-9% per month.