If we ever face the desire or need to take out a loan, then the institution that gives it to us may ask about the credit history. So let’s be aware of what it actually is, why it is so important, how and where it is created.
What is credit history and why is it so important?
Credit history is data collected about our loans, both those we currently repay and those repaid in the past.
These include, first of all, information about whether we pay them back on time, what amount they pay, what part we have already repaid, how much we have left, whether we had any delays along the way.
Our every move is therefore carefully monitored. And there is nothing wrong with it. After all, if we act scrupulously and honestly, we deserve an opinion adequate to the current state.
All data is collected in BIK. The task of the Credit Information Bureau is to collect but also share data on loans from customers of banks, credit unions, and non-bank loan companies. Mainly so that it could serve as a transparent platform through which you can easily obtain borrowers.
Why is credit history important?
Your credit history gives the potential lender information that we are doing the right thing. Thanks to her, she knows if she can expect to pay the installments on time, whether we are reliable, reliable and trustworthy.
Your credit history can be a kind of a pass to receive a larger loan, on better terms. Then we can expect an even better offer than we initially assumed.
Even the story we built on small loans becomes an argument when you want to take out a mortgage.
Good credit history – how to build it?
There are several ways to build a good credit history. If we do the right thing, we have nothing to fear. Credit history is the legitimacy of our seriousness, reliability, and regularity.
- Let’s not be afraid of being in BIK
We often confuse BIK with KRD (National Debt Register). However, these are two completely different institutions that have different goals. It is good to know exactly where the difference between them lies. This information can be found in the RAPLO guide – what are BIK and KRD. We will also give you permission to create our credit history in BIK – we can help us in the future.
- Timely repayment of installments
This is one of the main ways to avoid problems and build a good credit history. The easiest way is to set up a standing order on our account, so we don’t have to remember the amount that we have to transfer to our lender every month.
- Loan control
It is best to regularly check at what stage of repayment we are. This can be done in BIK. You should check from time to time whether there has been any mistake or omission, how many installments and for what amount we have to pay.
- Problems? Tell the lender
Sometimes the unexpected combination of events means that we won’t be able to pay the installments on time. Usually, this is not our fault. In the modern world, the loss of liquidity is absolutely normal.
If this happens to us, we should first contact the lender, inform him of the situation and circumstances and try to communicate with him. Let us remember that on the other side there is also a human being, and each of our intervention is usually recorded and treated as a supporting and mitigating circumstance.
- Credit card limits
If we are credit card holders, we should not regularly reach limits on it. This can give information that we are not in control of our finances, we have a problem and at the same time we may not receive the desired, higher loan in the future. The limit is not equivalent to the money we have. This is not our funds, but the bank’s money.
- Reasonable financial management
It is worth thinking about saving, giving up some unnecessary conveniences, especially in the case of bad credit history. It may turn out that we will reach the KRD, which in turn will result in further consequences. Taking another loan to pay back the previous one is also not a good idea.
Bad credit history – what is it and what to do?
Bad credit history is a scenario in which no one would want to participate. It contains information about our late payment, any problems that were related to our financial commitment.
If it looks bad, it may make it harder to get another loan. However, we always have the opportunity to improve our credit history – if a bank refuses to grant a loan, we can easily find trustworthy non-bank companies for which our credit history will be of secondary importance. Then we can build everything “from scratch” and prove our integrity and reliability.