April 21, 2024 by Wahyu Septiyani

Credit scores are influenced by various factors. Before applying for a loan, ensure your creditworthiness is strong to increase the likelihood of loan approval.

Many individuals apply for loans from banks or online lending platforms but may face rejections, which can cause concern. What if you try and hope to get a loan but end up failing? This concern can be mitigated by having a good credit history.

The Importance of Credit History

A credit history is like a report card. The borrowing process is based on the principle of trust, similar to borrowing from a friend. If you repay a friend's loan efficiently and reliably, the likelihood of future loans is high, without any billing drama or distrust.

Financial institutions operate in the same way. Before granting a loan, they assess the trustworthiness and responsibility of borrowers based on their credit history. Responsible borrowers can obtain loans without difficulty.

Information for each credit applicant is recorded in the Financial Information Services System (SLIK) or BI Checking, which is supervised by the Financial Services Authority (OJK). SLIK is crucial as it indicates a person's creditworthiness.

Credit Collectibility Categories Simply put, credit collectibility is the classification or categorization of an individual's loan payment quality determined by Bank Indonesia regulations.

Collectibility 1 - You have no problems with payments. Bills are always paid on time, even before the due date. You are smooth in paying bills. Thus, you are considered responsible.

Collectibility 2 - You have been delinquent in payments for 1-90 days from the specified due date. This makes you appear less responsible.

Collectibility 3 - Your bill payment process has been overdue for 91-120 days. This means you have been absent from your payment obligations for quite some time. Therefore, your credit is labeled as less smooth.

Collectibility 4 - You have been delinquent in payments for 121 - 180 days from the specified due date. Your credit quality is doubted. You will find it difficult to obtain loans on other occasions.

Collectibility 5 - If your arrears have exceeded 180 days without payment since the due date, you are certainly unable to borrow again. Your credit score is among the worst.

Based on these criteria, credit quality is assessed and categorized. The duration of payment arrears affects the credit billing category, with longer delays resulting in worse categorization.

Moreover, the credit quality of a debtor focuses on three main aspects:

Business prospects: Evaluating market conditions, competition, and company management.

Performance: Assessing profit earnings, cash flow, and capital.

Payment ability: Considering timely payments, accurate financial information, compliance with credit agreements, and appropriate use of funds.

Based on these criteria, the credit quality is assessed and categorized. The duration of payment arrears affects the credit billing category, with longer delays resulting in worse categorization.

The quality of credit determines the approval of bank loans. Good credit quality indicates that you are a responsible person. Thus, banks or financial institutions will be happy to provide loans. You are trusted because of your good payment history.

Conversely, poor credit quality will lead to rejections from banks or financial institutions to provide loans. Seeing the payment history and stalled arrears, you are not yet trusted to receive a loan.

During the pandemic, there is flexibility in the assessment of credit billing for borrowers in the real sector to support economic stability. The assessment is simplified to focus only on payment accuracy, while ignoring business prospects and performance evaluations.

In conclusion, maintaining good credit collection is crucial for bank loan approval. Maintaining credit quality also emphasizes the importance of responsible financial management.

How to Maintain Credit Quality

A good credit score will make life easier. Therefore, follow these steps to maintain credit quality:

1. Make sure you have a credit record at the bank. It's better if you are not a new borrower. At least you should have had installments such as credit cards, vehicle installments, mortgages, or personal loans because it means your credit score data has already been recorded by Bank Indonesia and OJK.
2. Pay installments before the due date until full repayment. Avoid delinquency. Arrears are the most influential points on the credit score. Don't let yourself be on the blacklist at BI and OJK.
3. Avoid paying the minimum payment or the minimum amount of the credit card bill. Although it is allowed, it is better to avoid it. It somewhat affects your credit score. Being used to paying the minimum payment is no guarantee that you will not default and struggle to pay bills in the future.
4. Take credit or installments that match your financial capacity. Adjust bank loans to your payment ability. So as not to create new problems like payment failures. You must be able to measure your own financial ability. You might want to try choosing an online loan with low interest that is more beneficial. One such low-interest online loan you can take advantage of is Neo Loan from Bank Neo Commerce in the neobank app.
5. Pay attention to the credit limit. Often, someone feels safe because they have a high credit limit. Eventually, they dare to borrow a large amount of money. It's better to avoid any sporadic actions like this. Use your credit quota as wisely as possible.

Whether good or bad, the credit score depends on ourselves. Maintain a good credit score so your financial reputation remains sound.

Go ahead, download the neobank app from the PlayStore and App Store and apply for a low-interest loan at Neo Loan.