How Much Is A Credit History?

A few years ago, few people knew that there was a special rating of each person, which shows how responsibly his owner treats his debts and finances in general. Banks and credit organizations first look at this document before deciding whether to grant a loan to a potential borrower. Many watch their scoring and try to improve it. And some even value it in monetary terms. So how much is the credit history of each of us?

It is important to understand that a credit score can affect not only the loan, but also its value. The higher your score, the greater the amount of credit that you can approve and the lower the rate will be for this loan. In addition, your device may also depend on CI, and even wages.

 

How much is a credit history: examples

How much is a credit history: examples

Your credit score directly affects how much you will pay each month if you decide on:

– purchase of a house or car;

– financing education;

– Or the time will come to pay off the debt.

 

If your credit history is bad, then it will be more difficult:

– get a loan for a major purchase;

– get a decent job in a big company;

– open a checking account.

Very soon, the credit history of each of us will be available to any legal entity, and perhaps an individual. Therefore, with a bad CI it will be harder to rent a car or an apartment.

To make it more clear how much a credit history can cost, consider examples of buying a car and a new house on credit in the context of three CI ratings – good, medium and bad. In our examples, the car will cost $ 20,000, and the house $ 150,000. The house is taken on credit with a fixed rate for 30 years, and a car for 3 years.

 

Besides the fact that a person with a bad credit history is harder to apply for a mortgage, he will also overpay many times more than a person with a good CI. For clarity, we showed a mortgage of 9.75% and with a 30% down payment. With a bad credit account, you may have to pay $ 50,000 as a down payment and take $ 200,000 at 9.75% per annum. In this case, the overpayment will be $ 209,475 – more than two times more than the loan amount and more than the house itself costs!

 

With the same amount of purchases and payment schedule, a person with an impeccable credit history saved $ 4,000 on a percentage when buying a car and more than $ 100,000 when buying a home. With such prospects, a buyer with an excellent score can save on another house or apartment when buying a house and on a good trip when buying a car.

 

Think of the future now – improve your credit history.

pay credit

For 30 years or more, you are likely to buy more than one car and finance several large expenses such as holidays or education. Considering how much interest you will have to pay over time, it is really worth the effort to improve your credit history. This can lead to hundreds of thousands of dollars over a lifetime.

In addition to saving money, do not forget about other things that may affect your credit history. You may greatly regret in the future if you miss a decent job or a good apartment. Who knows, maybe in the near future people will refuse to marry a person with a bad credit history.

The good news is that everything is in your hands right now. Small steps today can lead you to a good future tomorrow. Our blog has several articles on how to improve your credit history in the appropriate section. Also, if banks are often denied to you, we can offer you a loan with a bad history.

Unconventional Data In The Credit History

At the moment, unconventional data in CI is most interested in banks and other lenders. But data such as mobile phone payments, utility bills, and savings account information are also interesting for borrowers themselves. The interest in such data lenders is clear – they want to know everything about the client, especially how he handles money. But now borrowers also want to provide more information about themselves to the lender. They understand that this data can help them get a loan or better loan terms.

A study was conducted, correspondents interviewed reported that:

48% said they would not mind if the information on their utility payments was reflected in the credit history.

39% of respondents would be grateful if lenders would pay attention to the savings of borrowers and to maintain a savings account.

38% said they would prefer lenders to also look at their payments for Internet and mobile services.

At the same time, more than half of the respondents reported that their credit score would have only been won if unconventional data were used.

 

Alternative data can help people get credit.

Alternative data can help people get credit.

Proponents of the use of alternative data have long argued that the inclusion of non-traditional information in the credit history can help many people who do not have CI, to obtain affordable consumer credit.

Sooner or later it may even help people who have a good credit history to gain access to cheaper loans and loans. This can happen because lenders will more carefully study potential borrowers and make better decisions in terms of issuing a loan.

Today, there are already several banks and companies that provide loans, while requesting only unconventional data.

Some Financial Specialists say that people will be more willing to provide additional information about themselves if they know that they can control the provision of this information to some extent. Simply put to give people the opportunity to decide whether to publish this or that information. But, in this case, you need to understand that the lender can negatively regard the fact that the borrower has hidden information about himself.

Of course, the system needs to be monitored and certain rules set. So, for example, how to understand a lender or even a borrower that exact data were used? Or how to understand the client when the bank refused a loan, which data he used to assess solvency. After all, even when a borrower is rated by a lender according to the traditional system, sometimes there are failures. Invalid data sometimes gets into the credit history, and some, on the contrary, do not end up in it.

Today, disputes about your CI are supported by law. If you find an error, you can remove it from the report by going to court. Protection of alternative data will also need to be consolidated by law.

As you know, today there are several credit bureaus and it happens that in each of them there can be different information about the same person. It might be wise to create separate bureaus to collect alternative information. Accordingly, the consumer will be able to control the data about himself, applying separately to each instance.

 

The result is this

credit information

It is certainly worth using alternative data, but they must be accurate. Nevertheless, a situation where many people cannot receive funding due to a lack of information about them should be exhausted.

Many consumers will agree to the use of additional information by banks, but to get more opportunities to get a loan. But it is unlikely that many will like it if they do not know that the creditor uses information about them without their knowledge.

Alternative data may be a useful tool for obtaining additional information about borrowers, but there is also concern that in some cases this data may do more harm than good if borrowers do not have a reasonable way to regularly monitor all information that lenders use.

Loan Interest – Is It Possible To Reduce?

The interest rate on a loan depends largely on the borrower. And that means that it should be reduced to his strength. Microfinance organizations set minimum requirements for their clients. This is done to compete with banks and to facilitate the task of a potential borrower. As a result, they take the risk, as they receive little (or do not receive at all) supporting documents about its viability. For such loyalty and speed of issuing loans, they prescribe a percentage of the loan more than that of banks.

 

Reduce the interest rate on a loan

Reduce the interest rate on a loan

It is best to try to reduce these very risks that Payday Loans assume. Give the company all kinds of information about yourself (by the way, this can help if you need to take a loan without a passport). Show not only your passport, which is usually enough to get a payday loan, but also the rest of your documents. This may be a driver’s license, passport, various certificates, TIN. Eliminate managers from having to check your credit history – you can request it yourself at the CII and submit it. If you took loans in other payday loan companies and repaid them on time, be sure to indicate this in the questionnaire, adding the name of the organization. Even information about guarantors may affect the assessment of your candidacy, despite the fact that all Payday Loans say there is no need to provide such information.

Almost all Payday Loans have the ability to apply remotely – by phone or via the Internet. If you have a priority in the desire to get a reduced percentage – do not rush to use this option – it is better to come directly to the office of the company and issue all the proper documents.

 

The surest way to reduce the interest on the loan

The surest way to reduce the interest on the loan

Of course, the surest means of lowering the loan rate is the status of a regular customer of the company. Perhaps, in any business, companies value their customers and do everything possible to retain them and make many concessions in order to appeal to them again. Microcredit is no exception. In many companies, such as in the Money for the House company, there are special, more favorable conditions for obtaining a loan for recurring clients. This is a lower interest rate on the loan and larger amounts, and a greater choice of terms.

A microfinance organization can be a reliable partner for you from the very beginning of your relationship. Provide as much useful information as you can about, instill confidence in you and extinguish the debt in time.

Payday Loans “You To Me, I To You”

Few people have a secret that in our country there are sites on which Russians can take a payday loan or issue it (P2P – the market). Already a year ago, the BBG Finance seriously thought about how to put such sites in order and regulate their activities. This year, the regulator intends to accept the project, which prescribes special sites to obtain a license on a mandatory basis and transfer information about loans in the CII. The latter are likely to create new ones, especially for processing just such data. Such measures should help combat fraud and more detailed scoring of borrowers.

Site owners in which citizens give each other payday loans warned that in the near future a study will be launched in which some sites will operate strictly according to the new rules. During the study, ACB Bank wants to find out what rules really help and they need to be added to the bill. As far as we know, the new law will be signed this year, and in the middle of the next one will fully function. The BBG Finance confirmed the information that active work is underway to launch the project.

Under the sight of the ACB Bank P2P, the platforms came at the beginning of last year. In our country there are three types of such resources on the Internet. The first kind is sites on which almost anyone can issue or borrow from another. And you can find a payday loan, both from an individual and from the company. In addition, there are crowdfunding crowdinvesting platforms where people can invest their money in the project they like and, in case of project success, receive a percentage of the profits or finished products. It is very difficult to fully evaluate the P2P market. The regulator receives reporting documents from 20 organizations, but operating on the market is somewhat more. From the information received last year, ACB Bank estimated this financial segment at 1.5–2 billion rubles, suggesting a significant increase. Therefore, it was decided to make this market more transparent.

Fraud, unfortunately, is present today almost everywhere. Financial pyramids may now appear on P2P resources, with the help of which, investors’ money disappears. Therefore, the sites themselves are interested in the help of the regulator. In addition, lenders located on such sites will not mind receiving a more accurate description of a potential borrower. We should not forget about the specific instructions of the President of Russia and the Prime Minister aimed at improving the situation in the financial sector.

 

What are the requirements for P2P resources?

What are the requirements for P2P resources?

First of all, the site owner must have a license of the BBG Finance, that is, be a bank. Or the organization must be present in the register of microcredit companies. We consider the requirements for the authorized capital of the company, whether the appropriate tax and financial statements. Some market participants believe that it is necessary to better protect investors who use these resources. For example, special accounts should be involved in the process that will better protect money from fraudulent actions of unscrupulous P2P resources. Most likely, the lenders will have to improve the quality of verification of their clients and know exactly the order of funds movement. In any case, the new rules should improve the situation, reduce risks and protect consumers.

These Shortcomings May Affect Your Credit History In The Future.

If you have already read our article “Evaluation of credit history: the main factors”, then you already know which moments most affect the status of CI. But, requirements for borrowers are tightened every day, the same is true of the requirements for their history. Therefore, pay attention to the following list of criteria and try not to make mistakes that may emerge in the near future.

 

Fines for parking and other traffic violations

Fines for parking and other traffic violations

An unpaid parking ticket can easily create a crack in your scoring. If you do not pay the fine for a long time, then it will go to court. A court order is a public act, which, in turn, may adversely affect the credit history.

 

Credit Report Error

Credit Report Error

Your CI is a certain snapshot at a particular moment, the data in it often change and, accordingly, the score too. Therefore, in order to identify an error in the report on time, it is best to periodically check it. Also, do not forget that different fragments of credit history may be located in different LIC due to the fact that different banks work with different bureaus. So, check all parts of your CI to identify on time or eliminate the presence of errors in the document.

 

Reception with multiple credit cards

Reception with multiple credit cards

There is a technique that many active borrowers use to improve their scoring. They apply for as many credit cards as possible and thereby increase their total amount of approved credit. If they do not use credit cards, the ratio between the total amount of approval and the amount of debts is improved in favor of the borrower. But do not overdo it with this technique – a sharp taking of several loans can only worsen your credit history.

 

Various government fees

Various government fees

Failure to pay, for example, school government fees, such as: improving the laboratory, purchasing books for the library or repairing the gymnasium, can also be reflected in the credit history. So, do not forget about such things, otherwise they can harm your CI for a long time, even a long time after paying the debt.

 

Utilities

pay utility bills on time

Be sure to pay utility bills on time. Even, if at the moment in our country there is no mass practice to send cases of non-payers on utility payments to collection companies, you can always present an official document to the bank manager who will confirm your responsible attitude to your financial obligations.