Credit line provided to business entities

INFORMATION ON MAKING A LOAN GRANTING DECISION

The customer's loan application is satisfied if:

• The customer has provided reliable and complete documents,
• The customer has a positive or neutral credit history,
• The customer has a stable source of income,
• The collateral offered by the customer complies with the criteria acceptable to the organization.

The customer's loan application is rejected if:

• The customer has not submitted the documents necessary to obtain a loan,
• As a result of an inquiry to the CBA Credit Register and/or ACRA Credit Bureau, it turns out that the customer (and in case of presence, also the co-borrowers, guarantors, as well as family members living together) has a negative credit history. The credit history is considered negative if the customer has had or has loan obligations that were serviced with delays or were classified in accordance with the procedure "Classification of loans and accounts receivable of banks operating in the territory of the Republic of Armenia and formation of reserves for possible losses" jointly approved by the Central Bank of the RA and the Ministry of Finance and Economy of the RA,
• As a result of solvency assessment, it turns out that the customer is not solvent,
• As a result of the evaluation of the property offered as collateral, it turns out that it is not acceptable as collateral for the organization,
• Unreliable information was provided by the customer,
• The loan application has been approved, but the customer has not appeared or submitted the necessary documents within 15 days following the approval,
• As a result of the lending process, information regarding the customer has become known that casts doubt on the customer's solvency.

THE ESSENCE AND IMPORTANCE OF CREDIT HISTORY

Credit history shows how you have performed and continue to perform all your financial obligations.

Credit history contains the following information:

• The loans you received, their quantity and amount, the type and terms of each loan,
• The performance of payments arising from the loan (e.g., whether you paid interest and principal repayments on time or not),
• Guarantees provided by you to other people, the presence of overdue loans, as well as penalties and fines established for them,
• Unpaid or delayed utility bills,
• The average size of your salary received in the last six months. By the way, you can quickly and free of charge calculate the net balance of your salary or vice versa.

Credit history does not contain personal information, such as:

• Your ethnic origin,
• Political views and membership in other associations,
• Preferences, social status, religious beliefs,
• Data related to your health

Your credit history includes only data regarding the last 5 years from the moment of inquiry. If an inquiry regarding your credit history is made in August 2024, your credit history will reflect information starting only from August 2019.

Credit history is important because when you apply for a loan, the bank or credit organization evaluates how responsible you are as a borrower before deciding to grant you a loan.

According to RA legislation, ACRA cannot publish any data regarding the data subject without the latter's consent (except for special cases provided by law). An inquiry for a credit report can be made only with the written consent of the given subject. Written consent can be either a separate document or included in the content of the bank's or credit organization's loan application or agreement.

The consent for the inquiry of the credit report in "Gladzor UCO" CJSC is a separate document in the form presented below:

Consent (physical person)

Consent (legal entity)

For details: www.acra.am, www.abcfinance.am

THE ESSENCE AND IMPORTANCE OF CREDIT SCORE

For the purpose of granting a loan, banks and credit organizations consider your credit SCORE.

The score is your rating that evaluates you as a borrower, showing how conscientious a borrower you are. The SCORE is formed on the basis of credit history, therefore, if you have not had loans before, you do not have a SCORE rating either.

The purpose of the credit SCORE is one: to help lenders (banks, credit organizations) understand how risky it is to give you a loan. A high SCORE indicates low risk and vice versa. Therefore, a high SCORE can help you both in getting or not getting a loan, and have an impact on the amount of the nominal interest rate.

Currently, 3 types of SCORES are used in Armenia. The ACRA credit bureau calculates ACRA and FICO SCORES, and banks and credit organizations use them or apply their own scoring system.

As a customer's score rating, "Gladzor UCO" CJSC applies its own score rating, which is based on the following factors:

For details: www.acra.am, www.abcfinance.am

IMPACT OF CREDIT INQUIRY ON SCORE RATING

Depending on the type of credit inquiry, it can affect the types of scores used by the ACRA credit bureau (ACRA score and FICO score), as well as the proprietary score ratings used by financial organizations.

Details regarding the purposes of inquiries and their impact on the credit score rating are presented in the table below:

Each time a credit inquiry is made regarding a consumer, if that inquiry will affect the credit score rating (FICO, ACRA, or proprietary score), "Gladzor UCO" CJSC notifies the consumer about it within a maximum of 2 working days after making the inquiry. The notification specifies the date, purpose (e.g., granting a new loan, increasing the loan amount), and type of inquiry (credit history or score), as well as information or a link to the relevant page(s) of the internet website(s) containing information about the credit history/credit score.

"Gladzor UCO" CJSC provides the aforementioned information to the consumer free of charge via electronic message. In cases where it is impossible to send this information via electronic message when making inquiries that affect the consumer's credit score (when the consumer does not have an email address), "Gladzor UCO" CJSC informs the consumer through other available means (for example, via short message service (SMS), in person, or by postal delivery).

For details: www.acra.am, www.abcfinance.am

IMPROVEMENT OF CREDIT HISTORY AND SCORE

How to improve your credit history

If you have already formed a "bad" credit history, simply "sitting and waiting" for 5 years to pass so that your credit history gets "cleared" is not enough. Throughout that entire period, it is necessary to:

• Exclude even single-day delays in fulfilling obligations on current loans,
• Fully repay any previously accumulated overdue loan payments,
• Avoid becoming a guarantor for unreliable people in the future.

How to increase your SCORE rating

To increase your SCORE rating, you first need to correct the main reasons for its decrease. Specifically, you need to quickly pay off existing overdue obligations at the first opportunity, as well as:

• Lighten your credit burden by paying off existing loans partially or in full,
• Make repayments in accordance with the established schedule, avoiding delays and demonstrating punctual behavior,
• Reduce the guarantees you have provided by cutting their number and amount, and ensure the full repayment of any overdue obligations in this regard if they exist.

For details: www.abcfinance.am, www.acra.am

ACTIONS TO BE TAKEN TO MODIFY INCORRECT OR INCOMPLETE CREDIT HISTORY

If there is incorrect or incomplete data in the customer's loan application/credit history, for the purpose of clarification and correction, the customer may, in accordance with the provisions of Article 20 of the RA Law "On the Circulation of Credit Information and the Activities of Credit Bureaus", notify the credit bureau ("ACRA Credit Reporting" CJSC) or directly apply to the financial organizations providing the information. The notification can be made by submitting a corresponding written application to the credit bureau or electronically in online mode from the "My ACRA" personal office.

The process of receiving and reviewing customer complaints regarding credit reports provided by the credit bureau is established by the "Dispute Resolution Procedure" of "ACRA Credit Reporting" CJSC.

For details: www.acra.am, www.abcfinance.am