Thursday - February 23, 2023 10:53

TRAINING & COACHING

TRAINING & COACHING

PERSONAL CREDIT LOAN

I. Credit Institutions

1. Legal

Legal credit institutions are banks and financial companies under the management and control of the state bank with lending interest rates within the prescribed range.

When performing a loan transaction, both the lender and the borrower are guaranteed rights and benefits according to the provisions of law..

2. Illegal

Illegal lending institutions are institutions that lend at high interest rates that exceed the legal limit, such as loan sharks or institutions that lend without showing specific interest rates.

These individuals and organizations are not governed by law.

II. How to borrow from legal credit institutions

Currently, there are many banks and financial companies offering unsecured loans.

We can go to any bank to get detailed advice on loans, documents, procedures, interest rates... Refer to many banks to choose the bank with the lowest interest rate.

Example profile at Vietcom Bank:

Loan package information:

Customer target:

• Individual customers of working age.
• Customers receive salary from the State Budget or have a stable after-tax salary income of 6 million VND/month or more.

Documents to prepare:

Loan process:

• ​Step 1: Contact Vietcombank transaction points for advice on loan conditions and documents.
• Step 2: Prepare and submit documents according to the consultant's instructions.
• Step 3: Vietcombank performs appraisal and announces approval results
• Step 4: Prepare documents/perform procedures before disbursement
• ​Step 5: Disbursement

III. Characteristics, consequences and ways to avoid taking out illegal credit.

1. Characteristics

Because the need for loans for personal financial activities is quite large, illegal individuals and organizations can easily infiltrate people's lives. To avoid falling into the trap, you need to clearly remember the following characteristics:

• The loan procedure is very simple and quick, only requiring personal documents and vehicle ownership documents, in addition, the application is approved very quickly, sometimes within 10 minutes to 30 minutes.
• Simple contracts, even verbally agreed upon, with no accompanying documents.
• Very high interest rates: From 100% to 360%/year depending on the loan amount.
• Late payments will be handled according to "jungle law", "gangster law",... or a very aggressive and ferocious suppression by specialized debt collection teams.
• Lenders are usually individuals or organizations that are not licensed by law.

2. Consequences

• Because the interest rates are so high, the loan increases many times over, and the borrower cannot afford to pay.
• Constantly harassing debt collectors, bothering relatives, friends, the company... affects your life and puts you at risk of losing your job.

3. How to avoid

• Stay away from ads calling for preferential loans, or applying for credit cards with no proof of income or low income, etc. on social networking sites, bulletin boards, intersection leaflets, or electricity poles...
• You should find out loan information from banks or reputable financial websites guaranteed by the Ministry of Industry and Trade

• It is necessary to have a good plan to repay loans to avoid falling into debt collection, coercion, sanctions, etc.
• Should you ask and double-check information with friends and colleagues before deciding whether to borrow money from a certain individual or organization?
• When you need to borrow money from banks, you can contact the HC Board for instructions.

Borrowing from illegal organizations is abetting illegality and becoming a violator of the law.

4. CIC Credit Score

1. CIC concept

CIC credit score is an index that evaluates a customer's reputation in loan history at banks or financial institutions. Each individual's credit score is evaluated and recorded at the Vietnam National Credit Information Center (CIC for short), a unit under the management of the State Bank. The higher your credit score, the higher your chances of being approved for a loan. On the contrary, low credit scores make it difficult for customers to access loans.

2. Factors affecting CIC credit score

• Debt payment history (35%)
• Credit debt up to the time of borrowing (30%)
• Time to open a credit account (15%)
• Credit type (10%)
• New credit account (10%)

The chart shows the components that affect credit score evaluation

3. How to improve and not lower your CIC score

• Fulfill debt payment obligations on time: As mentioned above, debt repayment history accounts for 35% of the CIC score assessment. Therefore, customers who fulfill their debt repayment obligations on time will help improve their CIC credit score.
• Limit having credit relationships with many parties: Using multiple loans at many different organizations poses many risks to the customer's ability to repay debt.
• Do not apply for a loan on behalf of someone else: Applying for a loan on behalf of someone else is a very risky job for the customer.
• Do not borrow more or open more credit cards than you can afford: Customers should properly evaluate their ability to pay before deciding whether to take out a new loan or not.
• Don't cancel a credit card that's less than 6 months old: Canceling a credit card less than 6 months old will affect your credit score.

You can learn more about loans, norms and procedures on the personal credit and loans website: https://cic.gov.vn/

Kieu Giang