The majority of the population of the Republic of Latvia has already come across it, especially those who have used credit offers or car leasing.
But what does “credit history” mean, and why do bank staff pay so much attention to credit applications? What can you find in your credit history and how do the borrower find out this information? These are the issues we will address in our article today .
What does “credit history” mean
The credit history is identical to the financial liability statement that is created for a particular person. The credit history contains not only information about the loans already repaid , but also the person’s current liabilities. In addition to the basic information, the credit history also includes information on how each previous loan was repaid in good faith and whether the client is fully discharging his or her obligations to the utility companies (taking into account unpaid housing maintenance payments).
The proper execution of any of your financial obligations (loan repayments and utility bills) is the direct path to a clean and undamaged credit history that you will still need when applying for a cash loan, leasing, mortgage or car loan.
Not only banks, but also leasing companies can use the credit history database. In order to test yourself, it is advisable to review your personal credit history before each investor visit.
Individuals or prospective borrowers can check their details
Verify their ideal credit file and then go to the lender for financial assistance. In this case, the probability that the potential borrower will be denied is zero.
For creditors, such a database is proof of the customer’s responsibility and good faith when applying for leasing or borrowing money. By looking at the credit database, the lender can immediately track the trend of past and present repayments. Often, it is this fact which is decisive when considering an application.
Completing all of the loan repayment terms can help you not to worry about your financial reputation. But it is enough to delay bills when negative marks appear in your credit history.
Such information is entered into the general database of the borrower and will be kept there for the next 5 years. In the event that the overdue payment has already been repaid together with the total credit debt, the negative information will also be visible to other credit organizations throughout this period.
Each bank or any other company you are processing a financial transaction in will enter their information about you in the credit history database. Later on, your future credit will be reviewed by a future investor in case you want to take out a loan again or apply for a lease.
What are the features of credit history?
For a potential borrower, the characteristics of their credit history influence various issues in the design of their next financial products . For example, if you have a perfect credit history and you decide to buy a new TV at a popular online store, you have a number of advantages over others who want to buy the same new TV model. Why: Firstly, you will certainly not be denied the option to purchase the installment, and secondly, you will be offered the most favorable terms. As a result, you will receive the TV as soon as it is shipped to your city and pay its value without the high commissions and annual rates.
The management of such stores, after applying for a hire purchase, will first check your reputation in the Solvency Database. If your credit history is “not dirty” and you have been “great” with many liabilities, then the creditor has no reason not to trust you. That is why he will offer you a number of perks, which will allow you to save substantially on your purchase.