Credit history is data collected in the Credit Information Bureau on the subject of liability and obligations in paying current and past liabilities. It describes our cooperation with banks and other financial institutions, it contains various financial products: loan guarantees, short and long-term loans, subscription contracts and debit cards.
A positive credit history increases our scoring in the Credit Information Bureau, in other words, credibility towards lenders. This factor may affect the granting of a consumer loan by the bank and the repayment terms.
Often, clients with worse Credit Information Bureau history get credit on worse terms or the loan application will be rejected. So let’s have a good credit history to get, for example, a mortgage on favorable terms.
Why is credit history important for banks?
All this information informs the future borrower what our creditworthiness is and largely determines whether the loan or loan application will be approved. With a good credit history, the bank is able to grant a large amount of cash loans because it knows that we are solvent and we pay our liabilities on time.
Only parabanks offering short-term loans for a small amount do not check the history of the Credit Information Bureau. However, they also enter the borrower into the Credit Information Bureau database in the event of a loan being not repaid on time, reducing its financial credibility.
Such a patch effectively scares off banking institutions, and the removal of unfavorable history is possible only after 5 years from the repayment date of the delayed loan.
What affects a negative credit history?
It often happens that when applying for a loan we are issued with a negative decision due to the negative credit history. It is worth knowing the reasons why our credit history looks bad in the eyes of financial institutions. This is not necessarily the result of unpaid loans, and the reasons can be quite different.
Bad credit history can have a variety of causes that affect your refusal to grant a financial liability. The most important of them are:
- No timeliness in repayment – this is one of the most important factors that affect the calculation of Credit Information Bureau scoring. This may result in the rejection of the loan application or higher total loan costs.
- Difficulties in contacting the bank, where problems with paying the liability – in case of problems with repayment of the loan, it is best to agree on a joint solution with the bank.
- Exceeding credit card debits – Exceeding the bank’s designated credit lines, i.e. debits, gives us a bad credit history.
- Multi-stage debt resulting in numerous delays in repayment.
- No credit history – if we have never taken any credit, we are not financially reliable.
How to check your credit history in the Credit Information Bureau?
Before going to the bank to apply for a mortgage or cash loan, it is worth checking our credit history at the Credit Information Bureau.
It may happen that there is information about unpaid loans, and a period of 5 years has passed, from which you can try to remove adverse data from the database. We can also remove consolidated loans or remove false or information contained in the Credit Information Bureau.
Just set up an account in the Credit Information Bureau, login, and then download the free report from the Credit Information Bureau. In the event that we want to obtain very accurate data from the Credit Information Bureau, we recommend choosing the paid extended version.
Ways to build a positive credit history
Creating a credit history requires time, responsibility and knowledge. However, having a positive history will bring success to those who apply for a mortgage at a bank or other financial institution.
Here are some practical tips on how to raise your credit history in the eyes of banks:
- Repaying obligations on time – there is nothing worse for a consumer than a delay with loan repayment, try to watch over your loans.
- Using financial product offers – without any credit history, we are not very reliable. The large amount of liabilities repaid on time and those in the repayment history in credit history will be a sign for banks that you are solvent.
- Avoiding debt collection and debt enforcement proceedings – they show that the client had serious financial problems.
- Having a credit card – you can pay off debits on a credit card, but this involves high interest.
- Buying in installments – timely repayment of equipment in installments appears in the BIG database and positively affects our consumer rating.