If in the past we would buy only when we had a plus in the current account, the improvement in the standard of living came and gave birth to the "Credit Rating Law" • Its purpose: to classify every citizen according to his financial ability to repay loans • Credit Trauma in Corona "
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Until March, the Israeli mentality of being financially beyond your means - and we will not go into the sociological reasons at the moment - held on to many citizens.
Without thought, enjoy, show off, indulge indulge indulge.
The corona has come and instilled forced modesty in everyone, alongside anxieties of what to do with the large financial commitments we have made to ourselves and there is no way to finance it now.
It could be loans, a new car, an unconscious overseas or appliances and restaurants. Anything.
Quite a few Israelis do not know that until a year and a half ago, the price of such conduct was purely personal.
That is, you "broke" - you paid.
Did you break the current account? Go into a deficit and "it will be okay"? The responsibility is yours and one day you will cover it and that's it. In 2019 someone upstairs changed the rules of the game, which means that bad financial management will affect the interest rate you get when you take out
a loan or mortgage.
This is called the "Credit Rating Act".
A score given to every citizen in Israel, which indicates the amount of credit he deserves and the way in which he is expected to meet his financial obligations.
The new Credit Data Act went into effect in April 2019, and it allows for the collection of information about us as individuals.
Good borrowers and bad borrowers
How It Works?
A body called the database receives information from banks, credit card companies, executives, the official receiver, non-bank credit companies and others throughout the year.
The data are processed to the same score.
"What affects the level of interest rates is how dangerous the borrower is perceived by the lender," explains Eyal Hadad, who is in charge of sharing credit data at the Bank of Israel.
If I have been late in payments in the past, there is a chance it will happen again in the future.
Until the law was passed, only the customer's bank knew whether he was a good borrower or not.
Since the credit data system went live, the Bank of Israel has been collecting information on past and present payment ethics.
It passes the information with a three-year history to the credit bureaus as unidentified information.
Credit bureaus calculate the rating by scale, and everyone has their own credit rating.
A customer who has a good rating can ask the bank for a better interest rate. "
What is the situation of Israelis in this context today?
"Currently, starting in the Corona period, 75% of the ratings of Israeli citizens are good and excellent, and 15% are reasonable. That is, the payment ethic of Israeli citizens is high. Therefore, I call on you to take the data and get better interest rates. Of course there are weak populations. , Where the rating is low and we expect them to perform better and meet the morale of payments. If before the Credit Data Act it was possible to collect negative information, today positive information is also collected. This means that if a person returned a check because he was fired, he can improve the rating "Within months. We want there to be bidding on interest rates. One of the goals of the law is to increase competition in the credit market."
How do you get this rating?
"A customer who wants to get a loan, the bank needs to get his consent to withdraw the report about him from the credit bureau.
Three companies perform the reports: Dun & Bradstreet, Kupas BDI and Kav Mincha, which is in the process. The Bank of Israel releases the report, within seconds, and each body receives the credit report according to the company it works with. There may be minimal differences between these companies, but there will be no gap in the ranking between them. In the end, these are models validated by the Bank of Israel. The report will state that there was a loan, but will not say what the interest rate is and who gives the credit to prevent information. .
Any customer can contact the Bank of Israel website and request a data concentration report, which includes all the data of the submission of payments, loans and more - three years back. It also shows the level of interest because it belongs to the customer himself. Israel As of November 2020, 241,000 reports have been sent at the customers' initiative.
Millions were sent from the credit bureaus. "
Dror Strum, who headed the committee to increase competition in the banking system, explains the background to the law.
"Most citizens who have taken out loans and stood without a problem in mortgage or loan payments are rated high. These will receive preferential interest rates and loans. On the other hand, serial violators, who received low scores, will get credit on bad terms because no one wants to take a risk. The whole idea is to separate. Good borrowers for bad. The main variable is the level of risk, and the level of interest is the level of risk. Until the law, the banks took a high average interest rate that included the good and the bad together, and then everyone lost their uniqueness. The bad borrowers got a reward. "One of the customers' problems is lack of knowledge and lack of bargaining. Also, those who have a low score can appeal. If they prove that it is a technical fault, they improve the score."
Thailand and Dubai without account
On the side of the lenders is Uri Shuker, a director at the fintech company CreditShop, which provides consumer loans at the time of payment for large transactions in businesses.
, Which makes a few clicks on the internet and buys deliveries instantly, "Shuker analyzes the evolution that led to the law." We have become the ones who are less likely to keep the money in the bank.
In the past, when we had to consume expensive products, we used cash or a credit balance that we had in passing.
Today we consume from the credit facilities we have at the bank and credit cards.
According to CBS data, households in Israel have, on average, a surplus of expenditure on income ranging from NIS 1,000 to NIS 2,000 per month, and the marginal tendency to save has decreased. "
Shocker says that although there are others in the country who "buy only from what there is."
He calls them "Old School, who will make the deal when they have the amount. But it usually does not happen here. It is a method of countries like Germany. There to consume from what you do not have it is almost a crime. In contrast, for Americans to consume like that is a mitzvah."
A second option of purchase is to take advantage of the credit line.
"The rating examines the rate of utilization of credit facilities. The thing is that someday I would like to cover the minus and look for a loan and the rating will be low. The result will be in an extreme situation that they will not approve a loan or approve a high interest rate. A third option is to get a dedicated loan. For the next seven years, so it's better to take out a seven-year loan, for as long as it benefits me. That's how I earned the deal immediately but did not burden my passerby and kept the frame in the account. However, if the writer offers me to divide payments, what's the point? In the writer? "
Shocker attests to many young people taking out a loan for wild vacations in Dubai or Thailand.
"They are not aware that on the day they want to settle down, they may be denied a loan or receive less favorable terms."
And he has an interesting distinction about the past year.
"During the Corona period, the reservoir was traumatized," he describes. "Hundreds of thousands of households sought to freeze loans, repaid bank charges, had their source of income damaged and failed to meet their obligations. As a result, banks and credit cards stopped initiating loans. Their existing ones. "
Tehila Yanai, co-CEO of Kopas BDI, which serves as the Bank of Israel's credit bureau, notes that in recent months, in the wake of the Corona crisis, many companies have emerged that offer consumers to correct their credit ratings and delete negative entries.
According to her testimony, in many cases this is nothing less than a deception and an attempt to charge thousands of shekels for actions that the consumer can perform himself.
She says that Moshe Yadgar, CEO of the Dun & Bradstreet Credit Bureau, is giving a damn. "Recently, companies have sprung up, most of which take advantage of the public's lack of knowledge.
They offer an improvement in the credit rating by exiting the Bank of Israel's credit database and deleting the credit data from it.
Not only can this be done for free on the Bank of Israel website, but it impairs the customer's ability to obtain credit, "he warns.
And yet, there are reputable companies that offer services to improve rankings.
For example, Credit Clean has been providing consulting, deletion and improvement services for eight years through attorneys and staff who correct the personal report.
Rami Kostokowski, the company's owner and founder, says they "correct the errors in the data and seek to remove information that is incorrect and should not appear by law. There are dozens of grounds for deletion that appear within the laws of execution, bankruptcy and more."
According to him, "close to 90% of those who turn to us, find that there is something to fix with them. However, those who turn to us are those who think there is a problem and that the situation needs to be changed."
To what extent, if at all, can the personal ranking in the database be improved? Could there be errors in the data where?
Strum: "If someone violates regularly, their ability to improve will be minimal. Out of 30 violations, there may be one by mistake. These are computerized databases. Sometimes there are mistakes, so it's worth checking."
Hadad: "The total technical errors are about one hundred percent. The customer can contact our customer service center and request an immediate correction of information for free. What lowers the rating mainly is loan arrears, checks that return over time."
Shocker: "As with anything new, there are a lot of entities that report and sometimes there are mistakes. The greater my seniority in the bank, the higher the rating in this specific parameter. Because banks close branches, the account number changes and may be perceived as a new account. Be that I once got a check back at the bank for a technical reason because it was mistakenly signed, and it was mistakenly reported as no cover. In the past most of us relied on the bank with our eyes closed and that's fine. ".
