When banks refuse to grant credit to some citizens, it is often related to their credit history. However, how the system works, on what information banks base their decisions, and how past delays are taken into account in the future is not clear to everyone.
What is credit history, and how does this system work? To what extent does a few days' delay negatively affect a citizen's credibility with banks? How long does credit history stay in the database? Why are people without credit history approached with caution?
Medianews.az’s questions were answered by Professor Rəsmiyyə Sabir (Abdullayeva), Head of the Inclusive Social Development Department at the Institute of Economics under the Ministry of Science and Education, doctor of economic sciences, who stated that credit history is the financial record formed about a person’s previous credits taken and how they were repaid: “Simply put, this information shows banks whether a person has fulfilled debt obligations on time or has delayed payments. In the country, this data is mainly collected by the Azerbaijan Credit Bureau, and banks check this information when reviewing credit applications. When a person takes a loan from a bank or credit institution, the system reflects the loan amount, payment schedule, whether there were delays, number of active loans, closed loans, guaranteed debts, and other information. Banks conduct risk assessments precisely based on this data. Customers who make payments on time are considered more reliable. Conversely, those who often delay payments are considered risky clients. For this reason, even if two people have the same income, while one may be able to get a loan, the other might face rejection.”
Professor Rəsmiyyə Sabir emphasized that if delays of a few days occur repeatedly, this can affect the granting of credit: “Usually, accidental and short-term delays do not create serious problems. However, if such cases become regular, the system may regard it as negative financial behavior. Long-term unpaid loans significantly complicate obtaining credit in the future.
Banks particularly pay attention to payment discipline in recent months. Old problems may lose their previous impact after some time. However, ongoing delays are regarded by banks as a more serious indicator of risk.
Even if the loan is fully closed, the related information is not immediately deleted from the system. Credit history remains in the database for years, allowing banks to see the person’s past financial behavior. Therefore, consumers must strictly comply with contract terms when fulfilling credit obligations. Otherwise, a negative financial reputation may form about them, which limits their chances of obtaining credit in the future. A positive financial reputation enables citizens to obtain credit more easily and for higher amounts.”
The professor noted that some people think that banks should more easily grant credit to those who have never taken credit before: “Because those persons have no debt to the bank. However, banks approach the issue differently. The bank does not have sufficient information about the financial behavior of a client without credit history. For this reason, the bank cannot accurately assess in advance whether the person will fulfill debt obligations on time or not.
Banks are cautious with clients about whom they have no information. Therefore, some people first take a small loan, repay it on time, and thus form a positive credit history for themselves.”
Nailə Qasımova,