Why is BI checking needed for loan applications?

BI Checking, or SLIK, has now become one of the financial terms that young Indonesians should know. It’s so important that people in the United States even check their credit scores in their BI Checking system when looking for a partner (according to CNBC).
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Not only that, but does BI Checking affect job applications? The answer can be yes and no, because in this age of online loans, many companies and institutions require a good credit score in BI Checking as a prerequisite. Why is that? Let’s take a look at the importance of BI Checking in loan applications and other activities below

BI Checking is important to see someone’s credit history

Have you ever wanted to lend money to a friend but decided not to because another friend told you that this person likes to borrow money but never pays it back? Well, that’s somewhat the logic behind the use of BI Checking in credit applications, especially in banking credit.
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Of course, banks, as lenders, would be hesitant to give credit to someone if that person’s credit score in BI Checking is poor. Moreover, nowadays, Indonesians can access a lot of loan programs outside of banks, like paylater services, online loans (pinjol), and it’s not uncommon for the borrowed money to be used for consumer purposes or even gambling. Banks certainly don’t want to lend money to someone with a bad credit history in BI Checking. This is because, ultimately, banks have to recycle the money paid in loan installments by customers.

BI Checking is also an instrument that helps assess someone’s ability to manage finances. When looking for a partner, for example, someone with a bad BI Checking score would likely be seen as someone who frequently borrows money but cannot pay it back. So, it’s no surprise if your crush rejects you because of a bad BI Checking score!
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On the other hand, a good BI Checking score can show that you are financially savvy, using loan facilities carefully, and able to pay off debts. Therefore, it’s important to build a good BI Checking score to make it easier to get a bank loan and maybe even find a partner (just saying!).
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As for companies or institutions that don’t hire employees with poor BI Checking scores, it’s probably because many people list their workplace address when applying for online loans. As a result, debt collectors will visit the office if they can’t find the person at home. Of course, this would disturb others at the office, right?

How to build your credit score in BI Checking

So, how do you build a credit score in BI Checking? You can start by using legal loan facilities across Indonesia, from bank loans, borrowing from pinjol services that are connected to BI Checking, using paylater services in marketplaces, to paying bills with a credit card.
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Remember, debt or loans are not always bad as long as they are used for important needs and managed well. So, make sure you pay off your loans on time and ensure that the total amount of your loans doesn’t exceed 30% of your income to keep your BI Checking score healthy.
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For example, if you pay bills using the Honest Credit Card each month, make sure to pay your bill through the Honest App before the bill’s due date so you don’t have to pay interest or administrative fees. Do this consistently to improve your BI Checking score.

Consequences of a bad BI Checking score

There are at least two consequences if your BI Checking score is bad. First, you might still get a loan from a bank or other financial institution, but it will be more difficult, like higher interest rates, a larger down payment, additional asset collateral, and so on.
Second, and most seriously, you may not be able to get a loan from that bank or any other bank. This is because all banks and financial institutions can access your credit history on the same platform.
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If you have already experienced the second consequence, you’ll have no choice but to clear your BI Checking by paying off any outstanding debts at a specific bank or financial institution. For example, if your BI Checking score is bad because of accumulated credit card bills in the Honest Credit Card app, the correct step is to pay off the remaining debt. Don’t worry, if you’re struggling to pay, the bank might offer you credit restructuring.
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Once the loan is paid off, make sure to send the debt settlement letter to OJK and check your BI Checking score periodically to ensure it’s improving. Nowadays, you can check your BI Checking score online on the OJK website, so you don’t need to go to the government office.

Just like "bibit, bebet, bobot" (meaning background, lineage, and character) in finding a partner, BI Checking is a tool to ensure you lend money and trust to the right person.