What is bad debt? Classification, how to check and 5+ ways to handle it

Understanding the concept of bad debt helps borrowers proactively control their credit history, avoiding affecting their ability to borrow money in the future.

1.2. Classification of 5 debt groups according to CIC

Based on CIC data, customer debt is divided into 5 groups according to risk level Circular 11/2021/TT-NHNN:

2. Causes and consequences of bad debt

2.1. Causes

Bad debt can be formed from both subjective and objective causes, including:

• Subjective causes (from the borrower):
  • Uncontrolled personal spending, misuse of capital.
  • Business loss, no clear financial plan.
  • Neglecting payment obligations, forgetting payment deadlines or deliberately delaying.
• Objective causes (from outside):
  • Job loss and sudden reduction in income leave borrowers unable to repay.
  • Illness, accident or health problems disrupt financial resources.
  • Natural disasters, epidemics, economic fluctuations affect business activities or employment.

Bad credit often stems from lack of financial management planning and lack of risk provisioning, resulting in borrowers being unable to meet their credit obligations on time.

2.2. Impact of bad debt

Bad debt not only causes damage to borrowers but also directly affects banks and the financial system. Specifically:

• For individuals/businesses:
  • Recorded bad credit history on the CIC system (National Credit Information Center), long-term impact on financial reputation.
  • Having difficulty or being denied loans in the future, including home loans, consumer loans, or credit cards.
  • The bank or credit institution may repossess the mortgaged property if the payment obligation is not fulfilled.
• For banks/credit institutions:
  • Must increase risk provision costs, affecting operating efficiency and profits.
  • Increased pressure on debt management, reducing the reputation and confidence of customers and investors in the financial market.

3. 3+ Ways to check bad debt

3.1. Look up via CIC website

Go to the official CIC website at https://cic.gov.vn, register an account, verify your identity and look up your credit history. The results will show your existing loans, payment status and debt group (1–5).

You can check your debt status on the CIC website or application.

3.2. Look up via CIC Credit Connect application

Download the CIC Credit Connect app on the App Store or Google Play, register with your ID card, take a photo for authentication and perform quick searches right on your phone. This app helps users view their personal credit score details and bad debt history more easily.

3.3. Look up at the bank transaction office

If you are not familiar with online operations, you can go to the bank where you borrowed money or opened a credit card to have the staff support you to check your CIC information. This form ensures high accuracy and you can get more advice on how to improve your credit score.

4. How to deal with bad debt

When you discover that you are being recorded as a bad debt on the CIC system, the most important thing is to handle it early and properly to avoid affecting your ability to borrow money in the future. Below are the steps borrowers should take:

• Verify bad debt information: Look up personal credit history through the National Credit Information Center (CIC) or contact the bank to confirm the cause, debt group and current status
• Full payment of overdue balance: Prioritize the payment of overdue principal and interest to stop incurring penalty interest, helping to improve credit history
• Track information retention time: After settlement, bad debt information will continue to be recorded on CIC for 1 - 5 years; during this time, it is advisable to limit the occurrence of new loans and maintain financial discipline.
• Proactively rebuild a positive credit history: Maintain loans on time, do not let overdue debt or credit card exceed the limit, thereby gradually improving credit score in the system.

You need to contact the bank immediately to handle the debt.

5. Frequently Asked Questions

1. Can I borrow money if I have bad debt group 3?

It is usually difficult to borrow, because group 3 is considered bad debt. However, after paying off and improving credit, some banks can still review the application after 12-24 months.

2. How long does it take for bad debt to be removed from CIC?

After paying off all debts, bad debt information will be saved on the CIC system for 3-5 years, depending on the level and debt group.

3. If I pay off the debt, can I borrow again immediately?

After settlement, you can borrow again but usually need to wait for CIC to update the status (about 1-2 months) and the bank to re-evaluate your creditworthiness.

6. Safe loans, quick procedures at SeABank

When you need legal and transparent capital, SeABank is a reliable choice with diverse loan packages, simple procedures and quick disbursement time. The bank always puts the criteria of "safety - clarity - speed" first so that customers can easily access capital while still ensuring their rights.

Borrowing capital at SeABank has a simple process and quick disbursement time.

Outstanding advantages of borrowing at SeABank:

• Unsecured loan application does not require collateral, simple procedures, disbursement in just a few days.
  Mortgage loan packages such as savings book mortgages are implemented with preferential interest rates and quick procedures.
• The bank is transparent about conditions and fees, helping customers take financial initiative and avoid risks related to illegal loans.

You should prepare personal documents such as ID card, income statement and related documents (if mortgaged). Then, you can go directly to the branches.h of SeABankto get advice on suitable loan packages or proactively register for online loans via SeAMobile/SeANet.

Here is some information to help you understand What is bad debt? Debt groups according to CIC as well as consequences and effective ways to handle them. In general, always control your finances well, pay on time and regularly check your credit history to maintain a transparent loan profile, expanding your access to capital sources at reputable banks.

If youIf you want to learn more about SeABank's loan products, you can contact the nearest transaction point or call Hotline 1900 555 587 or visit the website.www.seabank.com.vnfor more details.