astajaznan OP t1_ja8htmj wrote on February 27, 2023 at 5:05 PM

Reply to comment by whomp1970 in Eli5 credit score please. by astajaznan

Also, I am not aware we have somethinhg similar to credit score company. Maybe our tax office does some mediation in this sense.

bulksalty t1_ja8k9f6 wrote on February 27, 2023 at 5:20 PM

How easy is it for an individual to file bankruptcy in your country? Does your country have liquidation bankruptcy (where debtors can get nothing if a borrower has no assets)? How hard is it to collect on a defaulted debt? How easy is it to set up and collect a wage garnishment?

Lenders want to know a lot more about how likely people are to pay them back with there are legal ways for them to not be repaid.

Since you mentioned the Balkans, I found a source indicating Croatia (to use as an example) didn't have any legal means of personal bankruptcy. In the US, almost 2% of the population went through a personal bankruptcy last year (many of those bankruptcies likely resulted in most of those borrower's debts uncollectable). Credit scores are going to be a lot less important if there's no legal way for a borrower to not pay their debts.

astajaznan OP t1_ja8m8t0 wrote on February 27, 2023 at 5:33 PM

I am not familiar with the way a person can file for bankrupcy but I found the article from Croatia that describes it. Same policy is, I believe, in all ex-Yu countres. You can translate it, sinc I'm not to "financial lliterate", to translate it in my own words. https://www.tportal.hr/biznis/clanak/zaglibili-ste-ovo-morate-znati-o-osobnom-bankrotu-20160812 I know that if company files for the bancrupcy, the founder of the company can not open new company on his/her name for next 5 years.

As I understand, when signing the contract with the bank for loan, both parties have to present evidence they have something to back up the loan. For bank that is not hard to present, and for person, in my case, is apartment we live in. The bigger the loan you ask for, the richer you have to be in order to support it. I don't know how it goes with a non-purpose loan. The bank will probably foreclose if you don't pay, or in the case of a loan with a guarantor, if you don't pay - the guarantor is obliged to repay your loan.