Like in many other countries in the world, Vietnamese banks also have an interconnected credit information system. This system will help banks check their customers’ credit rating and history.
At present, this system is called Credit Information Center (CIC). Information in the system is one of the important factors in the credit review of banks.
Vietnam National Credit Information Center is a public non-business organization directly under the State Bank of Vietnam, performing the function of national credit registration; collecting, processing, storing and analyzing credit information; preventing and limiting credit risks; scoring and rating the credit of legal entities and natural persons within the territory of Vietnam in service of the State management requirements of the State Bank; providing credit information products and services in accordance with the provisions of the State Bank and the law.
The Vietnam National Credit Information Database, managed by CIC, stores the information of more than 30 million borrowers, with the participation in information reporting of 100% of credit institutions operating in Vietnam, 1000 people's credit funds and microfinance institutions as well as other organizations inside and outside the banking system on the basis of periodic and irregular updates based on modern technology and advanced, automatic information collection and processing solutions.
How CIC works
Banks will provide CIC with information about the loan, the borrower's name, and the loan payment process
. CIC will then aggregate them into a unified database that reflects the credit history of each individual / business. Then, when issuing a credit to a certain person, the bank will access the CIC system and check their information before making a final decision.
CIC divides NPLs into 5 different groups as follows:
Group 1 (Current):
- Current loans and credit institutions assess that they are fully able to recover both principal and interest on time;
- Loans that are overdue for less than 10 days and credit institutions assess that they are able to fully recover overdue principals and interests, and fully recover principal and interest within the remaining time limit.
Group 2 (Special mentioned):
- Loans that are overdue from 10 days to 90 days;
- First-time rescheduled loans (for corporate or institutional customers, credit institutions must have dossiers on customer evaluation of the ability to fully repay principals and interests on the first adjustment date).
Group 3 (Sub-standard):
- Loans that are overdue from 91 days to 180 days;
- First-time rescheduled loans, except for first-time rescheduled debts which are classified into Group 2 as prescribed.
- Loans of which interest was waived or reduced because the customer was unable to fully pay interest in accordance with the credit contract.
Group 4 (Doubtful):
- Loans that are overdue from 181 days to 360 days;
- First-time rescheduled loans which are overdue for less than 90 days within the rescheduled payment term;
- Loans with rescheduled terms of repayments for the second time.
Group 5 (Loss):
- Loans that are overdue for a period of more than 360 days;
- First-time rescheduled loans which are overdue for more than 90 days within the rescheduled payment term;
- Loans with rescheduled terms of repayments for the second time being overdue according to the second terms of repayments;
- Loans with rescheduled terms of repayments for the third time or more, including not yet overdue or overdue;
- Frozen and pending loans.
If you are in Group 3 to 5, most banks will not give you credit in any way. You should note that you have to wait until 02 years for your status in the system to return to normal. In some banks with strict risk control systems, when you reach level 3, they never give you credit again, no matter how many years have passed.
Henry Tran - VietnamCredit
So why do you have poor credit ratings? The following actions may have caused you to get a bad credit history:
- Late payment or non-payment of loan for several consecutive months or more
- Late payment or non-payment of charges used on credit cards.
- Unable to repay a loan, resulting in the mortgage of the loan being processed or assigned
- Being sued in court for failing to pay debts to other people or businesses
- Before getting a loan from a bank, you should preview how much you have to pay each month. After assessing your needs as well as your current income level, you ought to set the loan amount and the monthly repayment expense not exceeding 50% of your income.
- Do not try to get a loan when you know that your credit history in the last 2 years is not good. You will have waste a lot of time and money.
- Especially those using a credit card need to remember to always pay off your debt and never use more than your solvency during the month. And do not spend beyond 50% of the card's debt limit to ensure a good credit score.
>>> Credit rating: what you need to know