Deputy Chief Executive Officer of Azerbaijan Credit Bureau, Seymur Hasanov: "Having overdue days in credit history does not limit a person's access to credit opportunities."

Müsahibə | 11.08.2023

According to the latest report of the Central Bank of Azerbaijan, the volume of problem loans in June this year increased by 2.5% compared to May. As of July 1 of this year, overdue loans in Azerbaijan amounted to 502.3 million manats. However, this number decreased by 15.4% compared to the beginning of the year, and by 24% in the last year. Here, the role of citizens' credit histories being open to financial institutions is undeniable. But how to avoid bad credit history? Who is exempted in this regard? These and other questions of "" were answered by Seymur Hasanov, Deputy Director General of the Azerbaijan Credit Bureau.

- Mr. Seymur, how do you assess the role of the Azerbaijan Credit Bureau (Bureau) in the banking sector in terms of minimizing the credit risks of banks?

- Banks should have a set of information to assess the solvency of their potential customers and make the right credit decisions. The bureau compiles the data it collects from data providers in the form of a credit report, analyzes it and makes it available to users upon request. Using the most accurate and up-to-date information on the borrower's financial obligations, the bureau provides credit institutions with reliable information and thus serves to reduce credit risks by reducing financial asymmetry. Thus, the Bureau plays an important role in the development of the financial and banking sector, being the most important part of the credit decision-making process.

- How many organizations does the Azerbaijan Credit Bureau partner with?

- The bureau started its activities in 2018 and initially exchanged information only with banks and non-bank credit organizations. In the following periods, the number of partner organizations increased as a result of awareness-raising measures conducted by the Bureau. As of July 1, 2023, the Bureau exchanges information with a total of 219 organizations. These organizations include the Central Bank of the Republic of Azerbaijan, the Ministry of Justice of the Republic of Azerbaijan, the Mortgage and Credit Guarantee Fund of the Republic of Azerbaijan, along with all types of financial institutions operating in the country.

- In what case is the citizen's credit history considered to have deteriorated?

- If the decision regarding the application of the person approaching the organization for a loan is positive, a loan/loan contract is concluded. In addition to all other terms and conditions of the loan, the relevant contract includes a payment schedule that reflects the terms and dates of repayment. In case of failure to make payments on the dates and in the amount specified in the relevant payment schedule, i.e. in case of deviation from the payment schedule of the contract, the creditor organization starts counting the days of delay to the person. The calculation of the relevant delay days is calculated and recorded in the organization's system until the moment the client completes the necessary payment according to the payment schedule. Then, the history (positive and negative data) reflecting the manner of debt payment is submitted to the Bureau's database at least once a month in accordance with the requirements of the Law "On Credit Bureaus".

If the data submitted includes the presence of delinquent days, this data becomes available to requesting organizations from the moment it is submitted to the Bureau's database and becomes one of the main factors taken into account when assessing the creditworthiness of a person.

Considering the above, it is recommended that a person make payments on time and in full according to the schedule, and at the same time regularly monitor his credit history at least once a month.

- In what case can a citizen be given a discount so that his credit history does not deteriorate?

- The bureau processes data received from lending institutions on a daily and monthly basis regarding borrowers' payment patterns and shares the data with users in the form of a credit history. In accordance with the requirements of the law, the borrower's information is stored in the system in the form of history for 10 years and is presented to data users upon request. The information received by the data providers in the Bureau is only processed technically, and it is beyond the authority of the Bureau to make any changes on this data.

- From what period and under what conditions can the credit history be normalized?

- Debt information is stored in the history in the form of an overview report for 10 years. There are two scenarios regarding the reflection of the days of delay in the history: In the first scenario, the customer delays his payments while the loan agreement is active, and then, before the contract expires, he makes his payments at the required times according to the schedule, and closes the debt by making the last payment on time according to the schedule. In this case, only the history of the last 24 months is reflected in the person's history, and the last days of delay are not reflected in the person's history after two years.

In the second scenario, the customer does not make full payment on the last payment date required by the credit agreement, and days of delay arise. In this case, the relevant information (the number of days late on the last payment) is reflected in the person's credit report for a period of 10 years and is presented to information users upon request.

- Due to the devaluation and the Patriotic War in 2020, the credit histories of citizens who moved away from their place of residence and informed the banks about this have also deteriorated. Sometimes they are not allowed. What is the reason for this?

- The Bureau, with the support of partner organizations, has implemented a separate project on placing a special note in the credit history of persons who participated in the 44-day Patriotic War. So, based on the request of data suppliers, a special record is placed in the history of war participants, and the corresponding record is open to all users who obtain the history of the person. Thus, when a lending institution inquires about a person, they get information about his participation in the Patriotic War. At the next stage, the final decision on granting a loan to a person is made by the credit organization. Also, an appropriate approach was applied to citizens suffering from the "Covid-19" pandemic.

It is possible to determine the days of delay due to devaluation based on the information available in the credit history. So, in addition to the date of issuance and expiration of the loan, its currency is also reflected in the history data, and it is quite convenient for the specialist to determine the loan decision. In addition, it should be noted that all three cases are considered as special cases by the Bureau when preparing analytical services and reports, and the negative impact of the corresponding delay days is not allowed when calculating the score for individuals.

- Are there other alternatives for citizens with bad credit history? How can borrowers improve their credit history?

- In general, the presence of days of delay in the history does not limit a person's access to credit. Lenders are free to decide whether to allocate a loan by conducting a risk assessment. Lenders usually look at the history and investigate the reason for the delay even if there are days of delay. Depending on whether or not there is a special note in the credit report regarding the reason for the relevant delay days, each borrowing organization formulates its own internal policy and makes credit decisions in accordance with the relevant policy. In case of delay due to unjustified reasons, the creditor may offer a lower amount of credit to the client in accordance with its internal policy, and in this case the timely and full payment of the payments under the contract should be monitored in particular.

- How can citizens get their credit history?

- Citizens can obtain their credit history in several ways. Through the Findoc platform, which has been put into operation since last year (2022), individuals have the right to obtain information about their credit history online by registering completely electronically. Through the relevant portal, individuals are provided with the right to request free of charge twice a year. By registering on the appropriate platform and signing the consent application with SIMA or ASAN signature, users get digital access to information collected about them in the Bureau. Persons registered on the platform will be able to benefit from the following services:

- review of the credit report;

- review of the score report;

- obtaining the credit report in PDF format;

- obtaining a credit report signed with Asan Imza;

- redirection of the credit report from the official "e-mail" of the Bureau to another "e-mail" address;

- the possibility of online complaint regarding the information considered incorrect in the credit report.

After the limit of free requests is over, it is possible to pay individually for each product or to use more affordable subscription packages to benefit from the provided services. The link is used to connect to the service. At present, the number of citizens who register and actively use the relevant portal has reached 47 thousand people.

In addition, service windows have been set up at the ASAN utility center No. 1, and an opportunity has been created for citizens to obtain credit reports on paper at the corresponding service center. Also, by applying with an electronic signature or a notarized application form, people can get information about themselves by mail.

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