Under the concept of scoring is a method that allows you to assess the credibility of the borrower, assess credit risk and assess whether a person will have a problem with the timely return of cash. Statistical tools are used for this. Put simply, the potential customer profile is compared to the profile of other people who have already received a loan or credit.
The result is a point form. The higher the number of points and close to the result of the person paying the debt on time, the less risky the client is to the bank. Hence – the financial institution will be more willing to grant him a loan or a loan. A high number of points results in better credit conditions, e.g. a lower margin.
It is worth emphasizing that the Polish Financial Supervision Authority (KNF) imposes an obligation on banks to use scoring. Loan companies, however, can use scoring, but they don’t have to. The decision depends in this case on the owners and management boards of such companies.
Remember that your creditworthiness depends on many factors, not only on scoring. In a situation where the spouse has a bad credit history, some decide, for example, on property separation. When calculating the creditworthiness in this case, the bank will not take into account our spouse.
We can distinguish the following scoring models – behavioral scoring, application scoring, and credit scoring. The first one is nothing more than an analysis of the applicant’s previous service of financial products and, on this basis, awarding him points.
Application scoring consists of awarding points taking into account the applicant’s personal and property data. They are specified in a special card. Taken together, these points are a measure of the risk assessment of the potential borrower.
We can also distinguish fraud scoring, which is a process in which potential or existing clients are assigned the likelihood of fraud or abuse.
It is worth emphasizing that credit scoring is not only used by banks. Some non-financial companies also consider this rating. This is the case, for example, with GSM operators when selling subscription phones.
In banking scoring, data such as age, marital status, occupation, education, position, nationality, type of employment, place of residence, amount of household budget, number of dependents, possession of a car, bank account, payment card or insurance, as well as employment period in the current position and many other such information.
Then the point result is compared with the scoring table. If the minimum level has not been reached, then the bank issues a negative credit decision. In a situation where scoring slightly exceeded the lower limit, then it should be expected that the lender will request additional collateral or a surety for the liability. It can also reduce the loan amount.
Each bank uses its own scoring system, which is why there may be a situation when one institution refuses to grant a loan and the other application for a cash loan is approved.
This assessment can be particularly important when applying for a first loan. Therefore, you should start building your positive image of the borrower as soon as possible.
The bank is also interested in credit history, i.e. how the customer deals with timely repayment of liabilities – both current and past, as well as whether it exceeds the debit limits on cards. All this data is collected in the Credit Information Bureau.
If you want to check your score and see how many stars you have been awarded, you must order a special, paid BIK report. In addition, thanks to the BIK report you will know your credit history. Financial institutions can also use it for a fee.
Interestingly, the option of downloading a free BIK report is also available. It is true that we will not find points in it anymore, but we will be able to read information about our credit history.
The BIK scoring range is from 192 to 631 points – of course, the more, the better. The rating is presented in the form of stars from zero to five. The average scoring in BIK is 528.8 points, i.e. four stars. If there is no information about you in BIK, for example you have never taken a loan, your score may not be calculated.
Unlike banking scoring, BIK scoring does not take into account information such as education or marital status. In this case, the grade will depend mainly on our credit history. Factors that affect a lower rating in BIK include arrears with, for example, bills, repayment of irregularly larger debts, a large number of loans repaid late.
Many people wonder how to improve their financial credibility. Remember that you should take care of your credit history as soon as possible. More and more people are interested in the issue of student creditworthiness. The study period is a very good time to show banks and other institutions that we can make prudent decisions. It is worth building your positive credit history by buying equipment in installments and paying it back regularly
Financial institutions can use the information contained in BIK, which is why building our positive credit history is so important. Therefore, please remember on timely repayments, because despite the assurances of some companies, it is not possible to erase the bad history in BIK.
Unfortunately, there are also situations in which someone tries to take out a loan or credit on someone else’s data. The Credit Information Bureau has considered this possibility and created BIK alerts as a way to protect against fraud. We can use this service after activating the client’s account.