How to Build a Positive Credit History to Get a Loan from the Bank
The method is one: it is enough to repay loans and borrowings regularly and regularly, and agree to the processing of data about the fulfillment of obligations. What determines creditworthiness?
The Credit Information Bureau grants the bank’s customer from 1 to 5 stars or from 192 to 631 points. It is obvious that the more stars or points, the better. The customer’s point rating has a very big impact not only on whether the bank will give credit, but also on what terms.
By analyzing the possessed information, Retrodatabase considers information on repaid and current loans and advances. To calculate the point score (Retrodatabase scoring) a special algorithm is used.
Four types of information taken into account when assessing creditworthiness:
1) Quality of loans
In this group, the information pertains to the timely repayment. Each installment payment on time, raises the score, delays – lowers the grade. The reduction of the rating depends on three factors:
– how often the payment period has been exceeded,
– length of delay,
– how big was the unpaid amount on time.
Delays are saved in time intervals: 0-30 (days), 31-90 or 91-180.
It is mainly the quality of loans that determines whether we will get a loan or not, because its weight is up to 76% !
2) Credit activity
Refers to the number of loans repaid and held. The longer the positive history of the repaid liabilities, the better. The statistics clearly show that the longer the positive history of credit activity is, the lower the credit risk.
Credit activity is not the same as the number of loans. The more credit obligations, the lower the score.
Credit activity is 11% in the overall score.
And what if we have never taken a loan or loan? We do not have a credit history at Retrodatabase, and therefore the scoring can not be calculated. We will not get a loan then? If it were so, nobody would ever get a loan. In this case, the bank assesses the creditworthiness using the data on the basis of the loan application.
Can the rating of “credit activity” be raised?
Yes. “Tracks” after properly serviced loans are erased upon repayment (unless we have agreed to their processing, which is indicated due to the credibility assessment in the next period). The “track” after badly repaid liabilities remains in Retrodatabase for a period of five years.
3) Use of credit limits
The weight of this factor is relatively small and amounts to approx. 8%. All credit limits in ror and on credit cards are taken into account here. If you use them often and to the whole, then for Retrodatabase it means higher credit risk. This obviously reduces the scoring score.
4) Applying for loans
The last category is taken into account when calculating the scoring and influences it in 5%. The Retrodatabase system examines how often the customer submits loan applications. The system may (but does not have to, as it is the case for mortgage loans – the client is looking for the best offer), assess the situation in which the client in a short time asked for a loan from several banks but did not get the loan.
It is worth noting that it is not Retrodatabase, and the bank or loan company decides whether to grant us a loan or a loan.