A credit history is a record that contains information about all of a person's financial relationships with credit institutions. It includes information about loan applications, their approval, the banks where the loans were issued, as well as information about the timeliness of debt repayment, late payments, and participation in financial transactions as a guarantor or co-borrower.
In addition, data on other obligations can be added to the credit history: unpaid utility bills, fines or taxes. This history is updated with each new stage of payments or submission of new applications, and the information itself is stored in the credit history bureau for at least ten years.
What does credit history look like?
This form consists of:
- Personal data of the borrower: This includes full name, date and place of birth, citizenship, passport details, addresses of registration and actual place of residence, contact telephone numbers.
- Loan information: includes a description of all loans received, indicating the amounts, terms, conditions, opening and repayment dates, the presence of delays and penalties. Here you can see data on outstanding debts.
The document specifically states:
- Information about lenders: Information is published about banking institutions or MFIs that issued loans, as well as about organizations that requested COI.
- Information on loan rejections: All unsuccessful attempts to obtain a loan are indicated, indicating the reasons for the rejection and the frequency of delays.
Who is your credit history important to?
First of all, it is important for banks to assess the reliability of customers and the risks associated with issuing loans. Using the CI analysis, an organization can draw a conclusion about the financial stability of a person. If the borrower has a good financial reputation and consistently pays off debts, the bank will be able to issue him a new loan. On the other hand, the presence of arrears or other debts may indicate financial problems, which increases the risk of non-return of money.
However, other organizations may also verify it:
- Insurance companies: When evaluating a potential customer, insurers may look for late payments or other financial problems. This helps minimize the risk of fraud when concluding insurance contracts.
- Car sharing and car rental services: If it turns out that a consumer has credit problems or significant arrears, this may affect the refusal to provide a car for rent, even for a short period of time.
- Potential employers: For some companies, a CI check is part of the selection process for positions that require special responsibility — accountants, finance managers, department heads. Such checks allow you to assess the level of responsibility of the candidate.
Why check your credit history?
Regularly checking your credit history helps borrowers avoid unpleasant surprises when applying to financial institutions. It is important to know whether all payment details are correct and whether there were any accidental errors. This allows you to correct inaccuracies in advance that could negatively affect the lender's decision.
When should you check?
Before applying for a new loan or after a rejection: Knowing your history, a borrower can realistically assess their chances of getting a loan approved. If your CI is poor, it can be a reason for rejection. A rejection, in turn, will only worsen your financial rating. Therefore, before applying for a new loan or after a rejection, it is important to check your history and, if necessary, take steps to improve it.
After losing important documents: Losing your passport is a serious risk to your financial security, because if the documents fall into the hands of fraudsters, information about loans that the borrower did not take may soon appear in the credit bureau. Therefore, after losing important documents, it is worth periodically checking your history in order to notice possible unauthorized requests or unusual loans in time.
To check for errors in the credit report: Incorrect or unclear data can occur not only due to the actions of attackers, but also due to technical errors or human factors. For example, a record may appear in the history about an unpaid loan of another person with the same surname or about a delay that the borrower did not allow. To avoid a negative impact on the rating, it is worth identifying and correcting such errors in a timely manner.
Where can I get my credit history?
Information is stored in credit history bureaus (CBI), of which there are several in Ukraine. A specific person's history can be stored in any of these bureaus, and sometimes in several at once. To find out your CBI, you need to contact the bureau with a corresponding request.
Methods of obtaining:
- Through the state portal “Diya”: One of the most convenient ways to check your credit score is through the state platform “Diya”. You need to go to the portal, submit a request for a list of bureaus that store data. After that, you should register on the websites of these bureaus and order a credit rating report.
- Through the website of the Central Bank of Ukraine (CBU): After visiting the official website of the CBU, you should find out your unique borrower code, which is provided when applying for a loan. This code can be found in the contract or asked by bank employees. Then you need to submit a request for information about your history through the CBU website.
- Through intermediaries: If you don't want to search for a BCI or statement yourself, you can use the services of intermediaries: banks, financial brokers or online platforms. They will submit requests to the BCI or the CBU, and provide you with a report with complete information about your current credit rating.
The check can be performed free of charge twice a year using the first two methods. All subsequent requests, as well as intermediary services, will be subject to a fee.
Maintaining up-to-date information about history helps avoid unforeseen situations and financial problems.
How not to ruin your credit history?
Keeping your credit history clean is the best way to remain a reliable potential borrower for financial institutions. By following a few simple rules, you can avoid problems and improve your financial reputation.
Timely and regular payments
One of the main aspects of financial discipline is the timely fulfillment of payment obligations. Even minor delays are recorded in history and can have a negative impact. Therefore, it is important to make payments by the due date, as force majeure circumstances may result in funds not being credited on time.
Storage of receipts and debt repayment documents
It is necessary to carefully monitor the amounts of payments, in particular the commission, since even a minimal difference in payment can lead to the formation of debt. After each payment, it is worth checking receipts, regardless of the payment method (through the cash register, terminal or Internet banking). After the loan is fully repaid, it is advisable to receive a document on the closure of the debt.
Assessing your financial capabilities
Before applying for a loan, it is necessary to assess your own financial capabilities to repay it. It is necessary to avoid loans with conditions that are favorable for the bank but unfavorable for the borrower. It is also not recommended to take out several loans at the same time, as this can cause financial difficulties and aggravate the situation.
Regular inspection
It is important to periodically review your debts. This will allow you to notice any errors or inconsistencies in the information that may arise in a timely manner. Updated information about your ability to pay will help eliminate potential misunderstandings and provide peace of mind for the future.
Timely appeal to the creditor
If you experience financial difficulties or problems with fulfilling your obligations, it is important to immediately contact the organization that issued the loan. It is in the lender's interest that you remain a reliable borrower, so if necessary, the bank may offer options: restructuring, refinancing, to facilitate the fulfillment of obligations.
Proper financial management and transparent interaction with the lender will help maintain your reputation and facilitate further lending.
How to fix a damaged credit history?
It is quite possible to correct negative credit history by improving your financial discipline or finding and eliminating factual errors. Let's look at ways that can help improve your credit score and increase your chances of getting a loan approved.
Correction of factual errors
Factual errors include data that is incorrectly reflected in the report and has documentary evidence. If you find that your history contains information about a late payment that did not occur, you must submit an application to the credit bureau (CBI) that generated the report and attach documents confirming the incorrect entry.
Such documents may be:
- bank confirmation of no debt
- payment orders, receipts with the date of payment
- bank statement certified by the bank
After your request, the BKI requests information from the bank and makes corrections within 30 days. If the data is not corrected during this time, request a written explanation on this issue. You can submit an application through your personal account on the BKI website and by mail.
Appealing contracts that were not concluded
If the data contains records of loans that you did not apply for, you should apply to the institution to cancel these obligations and delete information about the loan from all BKIs.
It can be difficult to prove that you did not enter into a loan agreement or credit card agreement. If the loan is issued using an invalid passport, the organization that provided the loan is responsible for this. If the loan is issued using your current passport and it has not been lost or declared invalid, you may be required to provide the original agreement and documents confirming your identification.
Repayment of current debts
One of the easiest and most logical ways to improve your financial reputation is to pay off existing debts. Analyze your debt portfolio, consolidate small debts into one, and if you have several credit cards, leave only one. Pay fines and penalties and try to avoid late payments in the next 12 months.
Although banks do not disclose the exact criteria for making decisions regarding a loan application, it can be assumed that they assess the financial condition of a potential borrower over the past 1-3 years.
Credit cards and installment cards
Using a credit card can help improve your credit score. For example, you can get a credit card with a minimum limit even with a modest income, and in some banks, you can get one just by showing your passport. Credit cards often come with an interest-free period, which allows you to pay for purchases without additional costs.
By paying off your credit card within the interest-free period, you improve your history, avoid defaults, and use borrowed funds in a balanced manner.
Loan refinancing
Loans issued more than 3 years ago can be refinanced under new terms. When refinancing, it is possible to combine several loans into one, lower the interest rate or extend the repayment period, which will reduce the monthly payment. This may include full repayment of the current debt, which will help improve the rating. The most important thing is to avoid defaulting on new obligations.
Restructuring
If you find yourself in a difficult financial situation due to problems such as illness, job loss, or other unforeseen circumstances, you can ask your bank to restructure your obligations. This will help you avoid late payments and preserve your reputation.
Consumer loans
A small loan can help improve your reputation. It is much easier to get such a loan from the bank where you receive your salary. Repaying a consumer loan will improve your CI.
Deposit
Opening a deposit or investment account with active contributions has a positive impact on your rating. Such activity in the account for a year or more will help improve your reputation with banks, especially if there are no overdue debts on the account.
Is it possible to "reset" your credit history?
It is technically impossible to reset your history. But 7 years after the last negative entry, your history becomes "clean" if you have not made any new financial commitments. This only happens after the seven-year period has elapsed since the last financial event was recorded.
Ukrainian law does not provide a mechanism for removing records from the BCI at the borrower's request. Therefore, it is impossible to "withdraw" data from the BCI, even if you want to remove information because you want to improve your rating.
Credit history is an important indicator of financial reputation, reflecting all of a person's credit interactions with financial institutions. Proper credit data management helps build trust with banks and other organizations, which affects the ability to obtain loans, insurance services, or even employment.
