Credit is a word commonly mentioned in financial health talks. If you want to obtain a loan, get a credit card, and even rent an apartment, your credit history will then determine how other people view your reliability. In Armenia, just like in several other countries, your credit record is much more than just a number; it is a financial fingerprint that will follow you through adulthood.
But what is credit history anyway, how does it work in Armenia, and why is it so important when dealing with banks in Yerevan and elsewhere? Let us look into it.
What Is Credit History and How Is It Recorded in Armenia?
Your credit history is essentially a record of what you did in the past with borrowed money. It contains information such as
- Loans you have obtained (personal, car, mortgage, etc.)
- Credit card usage
- Your payment history-whether the payments were done on time or late
- Active loans and status of loans already closed
In Armenia, the credit history is being kept and monitored by the ACRA Credit Reporting company, which collects data from the banks in Yerevan, all microfinance organizations, and credit institutions throughout the country. These organizations report from time to time on the status of their clients in financial obligations: when good or when bad.
Within the database, lenders usually research your risk profile each time you apply for any loan or financial product. A good credit history, positive credit, means that you have been reliable, financially disciplined, and you have been managing your intermediate debts responsibly. On the other hand, however, a non-good sign can become a hurdle in borrowing or even opening a few types of accounts.
Why Credit History Matters So Much
Today, many aspects of life could be made difficult or easier in perfect accordance with one’s credit history. Here are a few reasons why it is so important in Armenia:
Access to Loans and Credit Products
Whether it is for a mortgage, a business loan, or a credit card, whether or not you get it depends largely on your credit history. The banks of Yerevan, as well as those throughout Armenia, look at your past behavior carefully to assess what is the risk of lending money to you. A clean credit history says: “Low risk,” so chances are higher for you to get filtered through with better interest rates and flexible terms.
Amount and Conditions of the Loan
However, if you manage to get the loan, the conditions of the loan, such as the amount, payment period, and interest rate, are further impacted by your credit score. Much better conditions can be granted to an individual who has proven to pay on time and borrow responsibly than to somebody who has always paid late or not paid at all.
Financial Freedom
One good credit history is one step to financial freedom. It provides you with several financing options for the highs of your life: acquiring property, growing your business, or even meeting unexpected medical expenses. A bad one can set you up in a series of denials.
How to Build and Maintain a Clean Credit History in Armenia
Just like maintaining good records in all walks of life, keeping a credit history clean in Armenia requires consistency in following due diligence. A few common-sense measures one can take are as follows:
Start Small, Build Steadily
If you are new to credit, take a small loan or use a credit card. Make small purchases and be diligent about paying off the complete balance right on or before the due date. Slowly, the banks start trusting you.
Pay On Time-Never Late
Late payments are among the major factors that hurt credit records. A single delay in payment is able to hang around in one’s credit report for anywhere between three to six years. In any case, one must never miss a payment and also stay ahead by setting up reminders, automatic payments, and alerts using apps.
Don’t Lend More Than You Can Repay
It is very tempting to take out bigger loans than you need to, especially when easy approvals are guaranteed. But such an over-extension can hugely compromise your capability to make repayments. Never stretch your repayment capacity. Be honest with yourself.
Check Your Credit Report
In Armenia, you may request a copy of your credit report free of charge once a year from ACRA. Having a look at it will help you identify issues in your credit reports like incorrect information, or any other mistakes, which might be pulling down your credit rating.
The majority of banks in Yerevan employ automated systems to assess one’s creditworthiness. Upon your application for a financial product, your credit report is checked immediately by ACRA. The process is quick and typical. While some banks might consider your income level and employment status, more often than not, your credit history weighs heavier in the final decision.
