2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
When a financial institution makes a decision regarding the issuance of a loan, a package of documents provided by a potential borrower is analyzed. But recently, situations have increasingly arisen when the borrower's income and financial situation satisfy all the requirements of the bank, and the client still receives a refusal on the application. An employee of a credit organization motivates this decision with a bad credit history of the borrower. In this case, the client has quite logical questions: when is it reset and can it be fixed.
Due to the low level of financial literacy, citizens often do not know how long a bad credit history lasts and what are the ways to improve it. It should be noted right away that it is much easier to spoil it than to restore it. Therefore, you should initially do everything to maintain your reputation with banking organizations.
What is a credit history?
This is information about loans previously received by the borrower, as well as the performance of debt obligations assumed. Many borrowers who have a problem with the approval of the application at the bank are interested in how long a bad credit history is kept. This information is stored in the BKI for ten years. The activity of the bureau is under the control of the Central Bank.
As for the question of what caused a bad credit history and when it will be reset to zero, it should be noted that no one can remove it ahead of time. It can only be improved in order to improve the chances of obtaining new loans in the future.
How to know your story?
In the event that the borrower satisfies the requirements of banks according to all criteria, but still receives constant refusals, it makes sense to familiarize yourself with your history. You can do it like this:
- On the official website of the Bank of Russia. First you need to find out the code of your history (you can get it at a credit institution), and in the "Catalog of credit histories" enter your code and read the information.
- By contacting the bureau directly. To do this, the borrower needs to send a request through the Central directory of stories. After receiving information about which particular bureau this information is located, you must contact them directly.
- Through various online resources that collaborate with the Bureau. But this method is not reliable. Sometimes those who are interested in the question of why a badcredit history and when it is reset to zero, they are ready to pay for obtaining information and making positive changes to it. This is what scammers use. Collecting money from users, they no longer get in touch, and information about the credit history remains negative.
Do I need to pay for information?
The law establishes that there is the possibility of receiving information free of charge once a year. In this way, you can find out why a bad credit history has arisen and when it will be reset, based on the fact that the data is stored for ten years.
If you need to receive such information more often, then such a service becomes paid. It is best to contact the official BKI partners, and not try to get information through dubious services on the Internet.
Bad credit history: causes of its occurrence
Among the main reasons are:
1. Late payments on previously received loans. Delays occur in the event of late payment of the loan. Financial institutions take the issue of timely loan repayment very seriously. Sometimes a delay of even one day can significantly damage the client's reputation.
As practice shows, a delay of up to 5 days is considered a non-serious violation. Of course, it is necessarily reflected in the credit history of the borrower. But such a violation, as a rule, does not have a serious impact on the subsequent issuance of loans. Repeated late payments for a period of 5 to 35 dayscan indeed have an extremely negative impact on history. You should also carefully monitor the amount you deposit. Sometimes, when repaying a loan, clients do not take into account the remaining pennies. But the bank can fully consider them overdue.
Besides the fact that late payments have a negative impact on credit history, they still accrue higher interest.
If a situation of impossibility of timely repayment occurs, be sure to notify the bank in order to change the payment schedule. In some cases, banks may meet the needs of the client.
So that over time the question of why a bad credit history arose and when it is reset to zero does not become a headache for the borrower, it is important to be responsible in fulfilling your debt obligations.
2. Previously unpaid loan. Complete default on the loan has an extremely negative impact on history. In the presence of such a fact, the vast majority of credit institutions simply refuse to lend.
3. Mistakes. The human factor can never be ruled out. Sometimes a bank employee may make a mistake when entering information in the database (incorrectly entered amount or date). Or problems may be related to delays in making payments. In such a situation, you should contact the bank so that the employee carefully checks everything and makes sure that the borrower is honest.
4. Fraud. Sometimes criminals use other people's documents to issue loans and borrowings, especially for microfinance organizations. A person learns about a damaged credit history when he receives calls from the bank.
5. Litigation against the borrower. In the event that a criminal case is initiated against the client, for example, in case of non-payment of alimony or utilities, this fact will certainly be reflected in the credit history.
Loan at the MFC
The question of how to fix a bad credit history is becoming more and more relevant for modern bank customers. In order for the possibility of obtaining loans from banks in the future, it is necessary to address the issue of correcting your reputation.
The most common way is to get lots of small loans and pay them back on time. If the credit history is not yet completely ruined, then in some cases a loan can be obtained from a bank. But, as practice shows, a financial institution will certainly refuse an unscrupulous borrower. Therefore, in this case, loans from the MFC become a real salvation. A microloan with a bad credit history is sometimes the only chance to correct the current situation.
Today there are a large number of microfinance institutions that do not attach much importance to the past of the borrower. The services of such companies are best used by dishonest clients.
If a borrower takes loans from microfinance organizations and repays the debt on time, then this information is reflected in the history. Thus, it gradually improves. A fewof such agreements, the borrower can get a chance to have the application approved already at the bank. However, applying for a microloan with a bad credit history in order to improve it has a significant drawback: despite the simplicity and speed of obtaining, the client is forced to pay a large percentage.
Making a loan in a shopping center
In addition, a loan can be obtained, for example, in a shopping center. Such points for issuing loans, as a rule, are not interested in the history of the borrower and quickly process a loan. You can borrow inexpensive household or digital equipment. This will allow you to correct your credit history and replace an old refrigerator or give a new smartphone to a loved one.
Mediation services
Now there are many brokers in the credit market who can help in this situation. In the event that a microloan cannot be obtained, intermediaries can really help, even if a bad credit history a year ago had no chance of being corrected. Their services, of course, are paid (a certain percentage of the amount of debt). However, this method cannot be reliable: many intermediaries use illegal schemes and methods to correct information.
But still, it's better to take care of correcting your story in advance. After all, many customers who have received a refusal already know what a bad credit history means for a bank. Therefore, when the borrower understands that he is not able to pay the debt on time, it is necessary to contact the financial institution with an application fordebt restructuring. The bank can meet halfway, as it is interested in getting back the amount provided to it, including interest.
But the main way to correct history is to pay the current debt on time.
Advice to borrowers
To avoid worsening credit history, it is advisable:
- During the loan repayment, collect all certificates and checks.
- Find out the exact amount remaining until the full repayment of the loan.
- After the debt has been fully repaid, take a certificate from the bank confirming this fact.
- If you lose your passport, be sure to report to law enforcement.
- If it is impossible to pay on time, notify the bank. Data to support this may be required, such as sick leave.
- Make all payments on time.
- Do not take out loans where the overpayment is too high and may have a significant impact on the financial situation of the borrower.
- Check your history at least once a year.
Conclusion
Thus, the problem of bad credit cannot be ignored. In the future, it can result in serious trouble. The statute of limitations for bad credit history is 10 years. But, as practice shows, it can be corrected. The most popular way is to take loans from microfinance organizations. But this is not a quick process, it may take more than oneyear. So it pays to be patient. But the main thing is to use only legal methods. All illegal attempts can be discovered, which will further lead to the complete impossibility of borrowing funds from banks.
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