Personal Finance

How to distinguish different types of credit

You will start to get used to the loans you are dealing with, especially in the age of credit cards. So you need to know the rules when engaging in credit loans and how to keep yourself a perfect transaction history.

Your credit history is recorded as soon as you make a credit transaction with your bank

How important is credit history?
If you usually shop with a credit card, or engage in mortgage / mortgage loans, you need to remember to pay the full amount when it’s due. You may not know that banks and credit institutions keep track of your credit information through credit bureaus. The system in Vietnam is called the National Credit Information Center – CIC. This organizational system will collect and store information about loans and debt history from individuals to businesses.

So, every time you are late or do not pay your credit card debt, these will be stored in your credit information on CIC. Banks and credit institutions will rely on this to consider whether to approve your loans.

On the CIC system, your credit history will be divided into five credit groups with varying degrees.

– Group 1: Outstanding loans
+ Borrowers pay debts on time
+ Debts that are overdue for less than 10 days.
– Group 2: Outstanding debt
+ Borrowings / liabilities are adjusted by the bank for the first installment.
+ Debts that are overdue from 10 to 90 days.
– Group 3: Unqualified balance
+ Although the repayment term has been adjusted but the debt is still overdue for less than 30 days.
+ Cases entitled to interest exemption or reduction because they are unable to pay interest.
+ Debts are overdue from 30 to 90 days.
– Group 4: Doubtful of loss of capital
+ Debts that are overdue from 90 to 180 days.
+ Although the repayment term has been adjusted but the debt is still overdue from 30 to 90 days.
+ Loans / debts adjusted by the banks and credit institutions for the second payment term.
– Group 5: Potentially Irrelevant Debt (Bad Debt)
+ Debts that are overdue for more than 180 days.
+ Although the repayment term has been adjusted but the debt still overdue more than 90 days.
+ The banks / credit institutions have adjusted their debt repayment schedule for the second time but still overdue.
+ Debts that are adjusted for the 3 rd payment term or more.

Always keep track of loans to ensure you have a perfect credit score

Starting with group 3, mortgage / unsecured loans will be considered by the bank and loan applications may be rejected due to substandard credit and signs of bad debt.

This credit history will be stored on the CIC for 5 to 7 years from the date of first acquisition.

So, check the maturity date, loans and spending methods to balance your personal finances. If you so lose support from banks for future goals then it will be very unfortunate!

Leave a Reply

Your email address will not be published. Required fields are marked *