Credit history and score

The bank uses its own credit scoring system in making  credit decisions. A credit scoring is a statistical analysis performed on the basis of the client's credit history and qualitative indicators, which shows the probability to fully and timely repay the loan. The credit history is included in the credit score calculation for the last 5 years from the date of application.

The main factors affecting the bank's internal scoring system are: FICO score (high FICO score will have a positive impact), number of current loans (increase in the number of current loans will have a negative impact), debt burden (high debt burden will have a negative impact), timely fulfillment of credit obligations (delinquent loans are a negative factor), frequency of applying for new loans (increase of the number of loan applications will have an adverse impact), client's work experience (little experience will have a negative impact), amount of income (higher income will have a positive impact).

You can improve your credit history and/or credit score by duly repaying your loan, using the loan proceeds as intended, reducing the outstanding balance and number of loans, and duly honoring your surety obligations.

To avoid deterioration of your credit history and credit score, clients should avoid making late payments on loans, unreasonably increasing the credit debt burden, number of loans, frequently applying to various organizations for new loans, or acting as sureties for unreliable persons.

For more information on credit history and FICO score, please visit: https://www.abcfinance.am,  frequently asked questions - ACRA (acra.am) and www.acra.am websites.

Criteria for making a positive decision:

• Acceptable collateral and surety bonds,
• Permanent residence,
• Stable source of income,
• Positive or neutral credit history,
• Valid and complete documentation.

Criteria for making a negative decision:

• Submission of untrustworthy documents,
• Negative credit history,
• High-risk source of income (instable or irregular income),
• Failure to submit documents for concluding a collateral or surety agreement.

Non-fulfillment or improper fulfillment of credit liabilities will affect YOUR CREDIT HISTORY.

• What is a credit history?

Pursuant to the RA Law “On circulation of credit information and activities of credit bureaus”, credit history is the credit information about the liabilities  assumed by the credit information subject, that describes the debts, payments, payment habits of the credit information subject, or information about credit liabilities or their fulfillment by the latter.

As a rule, credit history is used by financial institutions when issuing loans, as well as by manufacturing, sales or service organizations, in the process of making a decision on installment sale of goods/services.

• What are the sources of credit history formation?

The sources of credit history formation are ACRA partners (banks, credit organizations, insurance companies, organizations selling goods on an installment basis, as well as government agencies providing the credit bureau with information on individuals from publicly available databases in the manner established by the RA Government), which provide relevant data on the credit information subject.

• What is a credit bureau?

A credit bureau collects, processes, stores, and provides information (credit information) on fulfillment of financial obligations by legal entities and individuals, as well as uses it in preparation of relevant credit reports.

Owing to the services of a credit bureau, each legal entity or individual:

• Based on proper fulfillment of their liabilities, can build a positive credit history enabling them to use the financial services with better terms and lower interest rates,
• Can properly manage their liabilities and be always aware of the overall picture of paying out of their liabilities.

The services of a credit bureau allow creditors (banks, credit institutions), as well as organizations selling goods or providing services on installment basis to prevent borrowers/clients from assuming excessive obligations, reduce bad debts and provide support in their timely fulfillment.

• What is a credit report?

A credit report is a written or electronic document containing information on the fulfillment by credit information subjects (individuals or legal entities) of financial liabilities to business entities.

The report is based on data received from ACRA partner organizations and reflects credit data for the last 5 years from  the date of report inquiry.

• How long is a credit history kept?

According to the provisions of Article 11 of the RA Law “On circulation of credit information and activities of credit bureaus”, “credit reports issued by credit bureaus must not include credit information for a period over five years preceding the date of issuance of the credit report”.

• How to improve your credit history?

First, it is necessary to fully repay your overdue liabilities. In addition, it is necessary to exclude late payment (even by one day) of liabilities.

• How to dispute an error on your credit history?

If the credit history contains incorrect or incomplete data, then in order to clarify the reason of  inaccuracy and correct it, the borrower, in accordance with the provisions of Article 20 of the RA Law "On circulation of credit information and activities of credit bureaus", may contact the credit bureau or the information provider (source of credit information). This may be done by submitting a relevant written application to the credit bureau or electronically, online from "My ACRA" personal portal. The process of acceptance/receipt, discussion and response to customer claims on credit reports provided by ACRA, the sequence of actions is determined by the "Dispute Resolution Procedure" of ACRA Credit Reporting CJSC.