A person applies for a loan or microloan for the first time.
The lender - a bank or microfinance organization - reports this to the credit bureau.
The bureau creates a new CI. The CI includes the borrower's personal data and information about the submitted application.
The lender accepts or rejects the application and transfers this information to the credit bureau.
The credit bureau makes a record of loan approval or refusal.
If a loan is issued, the lender reports data on each payment to the credit bureau.
When the loan is fully repaid, a corresponding iceland mobile database entry is made in the credit history.
If the borrower does not pay and has a large debt, the creditor turns to collectors or to court, which is also recorded in the CI.
Judicial authorities or collectors transfer data on the progress of enforcement proceedings or the debt collection process to the credit bureau.
The credit history is replenished with new entries without notifying the borrower. This process cannot be influenced: organizations send information directly to the bureau, so it is impossible to hide the debt and clean the credit history from unwanted entries.
Later, when the borrower applies for a new loan, the bank or MFI requests his credit history from the BKI. The bureau provides a report that records all information about past and current credit obligations. The bank studies the CI, determines the debt burden, the personal rating of the borrower, on the basis of which it approves or does not approve the application. If the application is approved, the bank calculates the interest rate, amount and other lending conditions, partially relying on the borrower's CI.
Thus, the better the CI, the higher the chances of getting a favorable loan.
What affects credit history
When considering a loan application, the bank does not limit itself to studying the CI. Usually, a scoring system is used - a special algorithm that evaluates the borrower's creditworthiness according to a whole set of criteria. Each organization has its own evaluation algorithm, so a client who was rejected by one bank can easily get a loan from another, without correcting his credit history in any way.
By the way, you can be refused even if you have a good credit history: for example, if you are applying for a large sum without sufficient income or valuable property. Therefore, before submitting an application, make sure that you meet all the requirements for a borrower and that your income is sufficient to repay the loan.
However, if you are constantly denied loans even for small amounts, then perhaps the problem is in your CI and it is time to improve it. To find out, check your history. You can request a report through Gosuslugi, it is free if you apply up to twice a year.