How "credit history" works in Russia and how it affects your future

At the end of December 2018, an amendment to the federal law “on credit histories” was enshrined in Russia. This amendment introduced into the lives of Russians such a concept as “credit rating”. What is it? To what does it oblige and who will be able to use it?

But let’s go back a little bit to the beginning. And so! Let’s begin.

“Credit history” in the Russian Federation is the history of an individual’s fulfilment of obligations under loans and credits. In other words, it is your borrower’s file. It tells you how much and when you borrowed, whether you paid on time or were late in repaying the loan, and which banks you applied to for loans. In the Russian Federation, credit history was introduced by the Federal Law “On Credit Histories” No. 218-FZ of 30 December 2004^.

Who puts information on your credit history?

The main information in the “credit history” is entered by employees of credit organisations: banks, financial companies and credit consumer cooperatives.

Additional information about debts can be introduced by mobile operators and bailiffs due to arrears on alimony and housing and utilities.

How long is the information stored there?

Many Russians believe that the “credit history” clears itself by itself if you pay off all your debts. But this, unfortunately, is not the case. The information is kept for 15 years.

Who has access to your credit history?

This information was created to be used by banks to be sure of your solvency. And if you have a “bad” credit history, each subsequent loan will be more and more difficult for you to get. And one day you will get a bank refusal to give you a loan. First of all, you should familiarise yourself with your credit history.

How can I find out my credit history?

There are 26 Russian Credit History Banks. It is quite easy to find out which one holds your credit history. You need to go to the bank where you took out your last loan and get your “subject of credit history” code. On the website of the Central Catalogue of Credit Histories you will receive an extract of your credit history.

Changes in the law “On Credit Histories”.

So… what’s new? The personal “credit rating” is enshrined in amendments to the federal law “On Credit Histories”.

From now on, credit bureaus will not only provide Russians with a credit report, but will also issue a personal credit rating in points. The higher the score, the lower the level of a person’s credit risk. The calculation of the personal credit rating assigned to Russians will be carried out automatically, taking into account data on overdue loans, the level of creditworthiness, the frequency of requests to check credit history and its age, as well as his marital status, position and lack of debts on housing and utilities.

According to Mr N. Myasnikov, Acting Director General of the United Credit Bureau, today the consent of citizens to transfer credit histories to the bureau is not required. Banks and financial organisations are obliged to transfer information about their clients to at least one credit bureau (there are several of them) without the borrowers’ consent. At the same time, the credit history is not formed from the moment of the first loan – the dossier is created on citizens from the first application for a loan and, if a refusal was received, this is also included in the “biography” of the citizen.

Why do you need to know your credit history and who needs dossiers on Russians?

Russian citizens are advised to check their credit histories. There may be errors, such as, for example, backdated information about loans, irrelevant information about a closed loan, delinquencies that did not occur. It is possible and necessary to correct such errors, so as not to spoil your credit rating, which can be requested about you or you by various interested organisations, here are some of them:

Insurance companies are taking a huge interest in credit histories. They have noticed “a direct correlation between payment and driving discipline”. Perhaps in the future, a good credit history will serve as a bonus or discount when taking out car insurance.
The second most interested are employers. They believe that if a candidate for a vacant position spends more than half of his salary on loans, he will not be able to adequately assess his capabilities, and delinquencies indicate his indiscipline. Employers also pay attention to the behaviour of a citizen when communicating with creditors, when the situation concerns hiring an employee for materially responsible or managerial positions.
Notaries will also be interested in your credit rating in points. They in turn, having access to your credit history and rating, will evaluate the inheritance estate more adequately. If previously debts after inheritance were often a surprise, which was presented suddenly by collectors, now heirs will have much more information about possible debts, which will put everything in its place even before the inheritance.
The data will be of interest to landlords, who will be interested in obtaining tenants from the most financially sound and disciplined segment of the population, who have their finger on the pulse of their financial situation and fulfil all financial obligations in good faith.

In short, if you have a “good” credit history with a high credit score, you can qualify for the “best” place under the sun, but if you have a ” bad” credit history and a low credit score, you should worry about improving these indicators as soon as possible, otherwise, you may simply not be employed in a prestigious office, your car may not be insured at the highest rates, you may not be able to sign a lease on your favourite home or office , and there is no telling what kind of cost increases and rejections this way can lead to! And this, as you yourself realise, is a complete “collapse” of all hopes for a happy future.