Top Questions About Your Credit History
A credit history is a complex document that may be of interest not only to banks that use it to assess the reliability of customers, but also to a potential employer and an insurance company. Therefore, it is so important not only to observe payment discipline, but also to regularly order a report on your credit history: no one is immune from fraudsters and from bank errors.
The credit history contains data that can be used to judge your previous loans, as well as how disciplined you were to repay them. If a person has never been credited to a bank, his credit history is empty and does not affect the possibility of issuing a loan in any way.
A positive credit history greatly facilitates the process of taking out a loan. But if this story is negative, it means that previously there were often significant delays in the payment of loans, or there were cases of non-repayment of funds. To a person with such a credit history, the bank is highly likely to refuse lending, or issue a loan, but at a very high interest rate that compensates for the bank’s risks.
Knowing your credit history is important for anyone who is going to use banking services, in particular to use loans. Below are the main questions concerning the credit history.
How do I find out my credit history?
Full information about where and when you took out bank loans, as well as how disciplined you repaid them, is sent to the credit bureau. There, your credit history is formed from this information. If you want to get acquainted with it, you must request a credit report from the credit bureau. Once a year, this document will be provided to you for free. Keep in mind that the credit bureau receives information with some delay. Banks transfer it by a certain date – usually the first days of each month. That is, if you repay the loan ahead of schedule, for example, on March 2, you will be able to see it in the credit report only in April.
Why do I need to know my credit history?
Thanks to the credit report, you will be able to understand why you were refused another loan. In addition, a credit report is an opportunity to analyze and take timely measures to correct your credit history. For example, if you were refused because you have current loans for large amounts, it would be advisable to repay them at least partially ahead of schedule and apply for a loan again.
Also, with the help of such a report, you can track the actions of fraudsters. There are cases when borrowers find out about the availability of a loan when the amounts reach gigantic proportions, although they themselves have not issued anything. As soon as a loan is issued in your name, this information is reflected in the credit report. Another advantage of a credit report is the ability to promptly correct false information that has got into it. To do this, you will have to contact the credit institution that provided this information to the bureau.
To what extent is the information from the credit bureau correct?
The Credit History Bureau data is 90% correct. There is about a 10% margin of a mistake. How can this happen? For example, the bank where you took out a loan and repaid it, did not submit information about the timely repayment of the loan, and you were among the customers with a delay. This happens, and quite often. Therefore, if you come to issue a loan, and they tell you that you have a bad credit history, and you really know that you have never allowed delinquencies, ask the Credit Bureau for your credit history. If your fears are confirmed, I advise you to contact a bank that has not updated the information in the bureau in a timely manner.
Why is having a credit history better than not having one?
Getting a good credit history is better than not having one at all. It’s easy to do this by issuing a small loan and paying it off quickly so that the overpayment for interest is minimal. One of the advantages of such a step will be the ability to quickly borrow money from the bank next time in case of force majeure. In addition, if someone opens a loan in your name, you will be immediately aware of the situation and will be able to quickly solve the problem.
Is it possible to correct a negative credit history and what needs to be done for this?
It is not easy to correct a negative credit history, but it is possible.
First: it is necessary to find an opportunity to borrow from friends, relatives or others and pay off overdue debts.
Second, it is recommended to take out small loans, close them on time, and gradually increase the requested amounts, if necessary. Thus, by methodically opening and closing newly opened loans and progressively increasing the amounts, you will show that you are a reliable borrower, and your report is getting better. Yes, there were troubles, but recently you have improved, and you return everything on time.
Third: as a rule, banks look at your credit history for no more than 3 years. Therefore, we advise you to be careful with overdue payments. It is better to find an opportunity and pay the loan on time or come to the bank and try to negotiate with the manager so that he gives some period to rectify the situation, the so-called “credit holidays”. Or the bank suggested another way out, for example, restructuring with reduced payments. Any overdue payment has an extremely negative effect on your credit history.
Tags: credit history, credit report, credit score, finance