So, you’ve come to the bank with the intention to receive a credit, perhaps, not the first time, and it is obvious that initially you study the conditions of loan contract. You are primarily interested in the credit interest and repayment conditions. However, you notice that the text of the agreement has such a line: the bank has the right, and the mutuary consents to give information about his credit report to the credit bureau. The bank has right to get the credit report during the whole period of the treaty.
Surely, you have an issue: What is the credit report and what is the credit bureau, which transmits intelligence about your credit report?
Credit report- is the complex of data about the corporate or physical body, which contains intelligence about discharge of duties under the credit contracts.
Credit bureau – is a juridical person, particular activity of which is the collection, storage and application of information – credit report.
One of the major problems of relationships between banks and loan subscribers is the lack of full trustworthy information about a mutuary.
Every bank has special and expensive services, which task is to collect and monitor information about the debtor, his financial status, the presence of other liabilities, how he repays other credits, etc.
On the other hand, a borrower with a good credit report cannot convince the bank to take into account this report, when determining the bank interest on the loan because the bank requires an objective, not subjective, evaluation.
World experience proves that there is a very effective and proven way to develop a new approach to the relationship between lender and borrower through the establishment and operation of credit bureaus.
Bureau raises the level of bank’s intelligence about potential debtors and gives an opportunity of more accurate prognostication of repayment of loans. Bureau allows reducing the charge for the search of information that the banks made from their clients.
Bureau creates a kind of disciplinary mechanism for debtors. Everybody knows that in case of non-compliance with obligations their reputation in the eyes of potential lenders will fall. This mechanism also enhances the stimulus of the mutuary to return the loan, reducing the risk of misconduct.
Not very long ago loans were affordable to many people and they didn’t miss this chance. To be on the safe side they have to check their credit reports. This is very useful task but it may seem hard for somebody. It is possible to use credit monitoring service – they will help you to understand the reports clearly.