New Law on Credit Histories: What Banks Will Know about You

On October 7, the Verkhovna Rada adopted in the first reading Bill No. 14013, which introduces and defines the rules for maintaining credit histories and state control over this activity. The document grants Ukrainians new rights that can protect against credit fraudsters. However, the norms of the new document also hide many dangers, as Managing Partner of K.A.C. Group Volodymyr Harkusha told Minfin.

Key Provisions of the Law

According to the Association of Ukrainian Banks, in 2023 and 2024, there was an increase in consumer lending by 24.72%, and lending to individual entrepreneurs by 25.85%, respectively. The increase compared to the pre-war volume as of 01.01.2025 was 49%.

The Law introduces credit histories into the legal field, and based on to the information from it, borrowers with a good history will receive better borrowing conditions: lower interest rates, higher limits, and longer terms. Persons with a negative history may face refusals to borrow or less favorable conditions.

Borrowers will be obliged to regularly provide up-to-date information on the fulfillment of obligations, which should reduce the risks of fraud and inaccuracies.

Citizens will receive the right to review their own credit history free of charge, as well as to make changes or request the removal of inaccurate data.

The Bill also provides for the possibility of temporary access to credit histories of missing persons for their relatives during martial law, and in the event of the death of the borrower, the right to receive relevant information for official representatives.

A ban is imposed on the use of information from credit histories by third parties without the consent of the owner and sanctions are established for violation of these norms.

A “stop-credit” mechanism is being introduced. If a person officially declares their unwillingness to conclude credit agreements, any new loan after that will be considered invalid.

Information about Ukrainians Available to Credit History Bureaus

◉ general data – full name, date of birth, basic documents, registration and actual address, etc.;

◉ unique entry number in the Unified Demographic Register;

◉ information about current employment;

◉ income level reported by a credit history subject;

◉ information about the marital status of a credit history subject and the number of their dependents;

◉ contact information (telephone number and/or e-mail address, and/or correspondence address), or indication of the absence of contact information.

Risks for Borrowers

Information for creating the credit history will be collected not only from open sources and relevant registers, but will also be received from financial institutions. At the same time, a financial institution will not need to obtain the borrower’s consent to share such data.

The increase in the volume of personal data carries significant risks for borrowers. The collection and storage of such detailed information creates a threat of data leakage or its misuse. This concerns not only unauthorized information leakage, but also the possibility of abuse by credit bureaus. The fact is that the Bill significantly expands the scope of their activities and allows them to provide scoring assessments to potential borrowers or engage in consulting.

The possibility for credit bureaus to provide additional services, such as scoring and consulting, potentially creates a conflict of interest, since credit bureaus receive more leverage in the market. For instance, they may intentionally assess the creditworthiness of clients in a way that is beneficial to certain financial institutions.

The lack of effective control may lead to manipulation of the credit history market. Since the information may also come to credit bureaus from open sources, it is far from certain that it will be correct. However, it will be quite difficult to remove such false data.

If a person disputes such information, the bureau will only update the data according to its source, and data removal is possible only if access to such a source is terminated or loses its public status. In fact, this may lead to the impossibility of removing disputed information from the credit history if it remains available in open sources.

There is a lack of clear mechanisms for appealing incorrect information. The Bill provides for the possibility of the credit history subject to appeal incorrect data; however, the text does not contain specific procedures and deadlines for considering complaints. If the information is entered with errors, the borrower may need a lot of time and effort to prove its inaccuracy. This can lead to a situation where a person is temporarily deprived of the opportunity to obtain a loan.

Credit Scores for Borrowers and Other Issues

Such points as the need to collect information about the address of the borrower’s actual place of residence, information about current employment and income level, marital status and the number of dependents raise certain questions.

The Bill provides for the introduction of a credit score for borrowers, but the mechanism for determining such a credit score and its impact on the conclusion of a loan transaction is not defined. At the same time, the borrower will be able to obtain information about their data in the credit history bureau, with the exception of credit score data.

What about the “stop-credit” mechanism? How will banks promptly consider applications for a “stop-credit” so that bureaucratic procedures do not delay the time for which interest on the loan will still be accrued? In addition, the creditor must notify all credit bureaus that will be operating at that time about its reluctance to attract loans and monitor the emergence of new ones.

The Bill establishes a ban on concluding a credit agreement with a person about whom the creditor has received information from a credit bureau about his or her unwillingness to borrow. Before signing a credit agreement, the creditor is obliged to check the availability of such information in at least one credit bureau.

The consent of the person himself or herself is not required to provide such information. A credit agreement concluded after receiving information from a credit bureau about the client’s unwillingness to borrow is null and void. However, such an innovation simplifies the possibility of proving that a loan was obtained as a result of fraudulent actions, which will lower the creditor’s credit score, which will in turn complicate the procedure for obtaining other loans.

An accumulated credit history may lead to a refusal to lend to persons with certain financial difficulties in the past, even if their current financial situation has improved. Tightening creditworthiness requirements may reduce the availability of loans for some categories of borrowers, which is blatant discrimination.

The introduction of new rules could significantly affect the credit market, especially for people with middle and low incomes. Stricter credit history requirements could lead to banking institutions becoming even more conservative in issuing loans.

As a result, demand for alternative credit services could increase, in particular through so-called microfinance organizations that operate under less transparent schemes and charge higher interest rates, or pawnshops.

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