Obtaining a loan is commonplace for doing business or individual needs in Belarus. This action has its own peculiarities. One of them is a credit history. This article examines credit histories, how they are formed, why they are needed, and how they can be improved.
What does the law say?
Credit histories are formed based on Belarusian legislation. Its rules specify which organisations transmit information for inclusion in the credit history, who can receive information from the credit history, and the retention period of information in the credit history.
Before issuing a loan to a company or an individual, the bank requests consent to receive information from the credit history – a credit report. A credit report is an extract from a credit history. Sometimes, when applying for a job, an individual is asked for consent to receive a credit report.
What does “credit history” mean?
Credit history is information about credit transactions of a credit history subject. Subjects of credit history are individuals who took out loans, including overdrafts and microloans, made leasing transactions, were guarantors, and gave guarantees. Such transactions are called “credit transactions”. The credit history includes information about the dates of receipt of loans, how such contracts were executed, whether payments were paid on time and the repayment dates of delays.
Where is the credit history data stored?
The National Bank of Belarus has maintained a Credit Register for 15 years. Banks, leasing companies and other companies that make credit transactions are called “sources of credit history formation”. These companies send information to the National Bank for transfer to the Credit Register on concluded credit transactions and their execution and non-execution. Sending such information to the Credit Register is the responsibility of the sources of credit history formation.
The credit register exists online, and the information that the National Bank received from sources of credit history formation immediately appears in it.
What data is contained in the credit history?
The credit history includes several mandatory information. Such information can be divided into 4 groups:
- Information about an individual or a company that is the subject of a credit history. These are an individual’s personal data, citizenship, and place of registration. In relation to the company, this is the payer’s name, location, registration number, and type of activity.
- Information about the credit transaction. This includes the type of contract, the name of the company or bank with which the contract was concluded, and the date, number, and amount of the contract.
- Information about the timeliness of fulfilling obligations, whether payments were overdue, and whether there were court penalties.
- Information about the termination of the contract.
The credit history does not include information about the place of work and the amount of an individual’s salary.
Who can get acquainted with the credit history?
It should be understood that with the written consent of the subject of the credit history, any person can get acquainted with it. Banks are asked to sign an agreement to receive a credit report when considering a loan application.
Courts and law enforcement agencies can obtain a credit report without notifying the subject of the credit history and without his consent.
Can the employer check the credit history?
When hiring employees whose work is related to finances, employers often ask the candidate for consent to receive a credit report. The employer can receive a credit report with the candidate’s or employee’s written consent.
How can I ruin my credit history?
To ruin a credit history means reducing or eliminating the likelihood of getting a loan. Also, with a bad credit history, a subject cannot be a guarantor of another person when lending or leasing property.
Late repayment of loans, court foreclosures, and frequent requests for credit transactions would spoil the credit history even if they were not concluded.
Scoring assessment
When forming credit reports, the National Bank evaluates credit history for 9 years and assesses potential parties to credit transactions. This method of calculation is called the “scoring model”. The model takes into account:
- The probability of repayment of the loan by the borrower.
- Data on untimely amounts paid on loan transactions.
- The number of credit transactions and the types of these transactions.
- Amounts that have not yet been refunded under loan transactions.
- Information about age and place of residence.
The rating of potential borrowers guides banks in deciding whether to provide a loan.
In scoring assessment, information from the credit history is analysed using formulas to predict the future behaviour of the subject of the credit history.
Getting a credit report
An extract from the credit history in the form of a credit report can be obtained by the subject of the credit history himself. The credit report is issued as a paper or electronic certificate. To receive a paper credit report, you need to send a request to the National Bank. For an electronic credit report, you must go to the Credit Register website and complete your identification using the Interbank Identification System. An individual can get their credit report once a year for free.
An electronic credit report fee is 1.67 rubles, and 19.97 rubles for a paper credit report.
To receive a credit report for a fee, you need to conclude a standard agreement with the National Bank.
The Law on Credit Histories has been amended, which will take effect from January 2025. From now on, an individual can receive his credit report twice a year for free. Also, starting in 2025, an individual can establish a ban on issuing a credit report to other persons. The ban will not apply to law enforcement agencies. Also, starting in 2025, individuals’ consent to provide a credit report will indicate the purpose for which it is required.
The impact of credit history on obtaining loans
The National Bank of the Republic of Belarus issues a credit report with a rating score expressed in the form of points from A to F based on the ability and potential of the borrower to repay the debt. It is important to note that the credit report does not include recommendations or prohibitions on credit transactions. The credit report also contains:
Scoring points are a final score in points from 0 to 400, which corresponds to a particular letter of the rating score. Class A1 has a perfect rating score from 375 to 400 points. Grades A, B, and C with scoring points above 175 are also good credit history scores.
PPD is the probability from 0 to 100% that there will be a delay of more than 90 days over the next 12 months.
Each financial or similar institution has its own internal risk assessment rules, according to which a transaction can be concluded with a borrower with an E1 rating or not with someone with a B3 rating.
What reduces the score?
- A credit score reduces the lack of a credit history and a credit history that started recently.
- A lot of inquiries about credit history.
- The number of credit transactions.
- Short-term credit transactions.
- Long delays in repayment of money on credit transactions.
Scoring points are not calculated when there is no credit history or when a person or company has not concluded credit transactions in the last 5 years.
How to contact us
For more information or advice on issues related to credit history and obtaining a credit report, do not hesitate to contact us. We are here to help and support you.
Phone and e-mail communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
