A snapshot of your credit history can cost as much as a new car or home repair. According to estimates from the Good Finance Institute of Personal Finance, the mortgage interest paid by a person with a poor personal credit rating over the entire period may be as high as $ 40,000. higher than those that have maintained good credit history.
According to Odeta Bložienė, Head of the Good Finance Institute of Personal Finance, although credit history provides tangible financial benefits and is at least as important as customer income in assessing creditworthiness, Lithuanians still do not attach sufficient importance to it. The statistics also show that last year the number of persons who overdue their debts increased every year in all municipalities, leaving no one with a lower than average salary. In addition, in some municipalities, the average overdue debt is close to 50 thousand.
It is often mistaken
To think that credit history only concerns those who already have a loan. In fact, it is most relevant only to those who intend to borrow. Credit history demonstrates the ability of a person to manage their money, their cash flow, meet their obligations or pay for services on time, and is therefore one of the most important criteria when deciding whether to grant a credit. Meanwhile, a bad credit history increases the risk that the borrower will not repay the loan under the terms and conditions, which is likely to affect higher interest rates, shorter loan repayment periods or a negative creditor response, ”commented Bložienė.
Anatoly Kisiel, a lawyer with the Good Finance credit bureau, notes that for residents, credit history is often associated with credit installments. “People forget that credit history even covers covered debt for electricity, telecommunications, internet, cable and many other services. The consequences are caused even by seemingly small debts, and sometimes a couple of years ago. For example, in some cases, a bad credit history may result in the loss of the ability to enter into a communications service contract, rewrite an Internet contract on your behalf, or purchase a television by leasing, ”says Kisiel.
Credit history can become one of the most important factors
Determining the interest rate on a home loan. Good Finance’s Institute of Personal Finance estimates that 200,000 people will be unemployed. The interest paid by a person who has taken a home loan for thirty years over the loan period may vary by as much as $ 30 or $ 40, depending on whether their credit history is good or bad. litas. More or less the cost of a new car or home repair. In addition, credit history is also significant when borrowing smaller amounts, such as buying a car. A person who has a good credit history for $ 25,000 $ 5,000 less interest than a person with a bad personal credit rating.
Meanwhile, young people should not only care about their credit history, not only about the possibility of borrowing a home or car in the future but also about continuing their studies. The State Studies Foundation refuses to grant a government-sponsored student loan if the liabilities were not properly discharged. However, according to Good Finance, more than 10% are currently in business. students are not properly fulfilling their financial obligations.
Credit history should not be ignored
Even with financial obligations. ‘Where the borrower decides to transfer the loan to another financial institution for better conditions, or upon request to change certain conditions as a payment method or period, the individual’s financial situation and solvency shall be reassessed. At the same time, credit history data is updated, so if a person’s credit rating deteriorates, the loan terms will change accordingly, ”explained the head of the Institute of Personal Finance.
“It is clear that a good credit history opens up more opportunities and lowers borrowing. So how do you have one? First of all, I would advise you to look at it and review your credit history report at least once a year. Debts sometimes arise through yawning. And, as the bank’s analysis has shown, the interest paid for this inattention could be $ 40,000. It is also important not to over-commit and over-commit, and under no circumstances to cover one loan over another. In the event of difficulties in settling, one should not panic, but rather cooperate with creditors and establish a mutually beneficial settlement schedule, ”explains Mr Kisiel.