Archive June 2019

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.