When you apply for a loan, a mortgage or a credit card, the financial institution examines your financial history — your credit data. It determines whether you are approved and at what rate. Here is what it is and how to improve it.
Disclosure: Educational information only. Any action you take is your own responsibility.
The credit data system
Israel operates a credit data system managed by the Bank of Israel, consolidating information on citizens' financial conduct: loans, repayments, credit facilities, cheques and arrears.
The purpose is twofold: to let financial institutions assess risk, and to let consumers obtain credit on fairer terms — particularly those who manage their money well and previously had no way to prove it.
What a credit rating is
On the basis of the credit data, a credit rating is determined: a score reflecting your risk level as a borrower.
A high rating, reflecting good conduct, means a greater chance of approval and a lower rate. A low rating, reflecting arrears and debts, means difficulty obtaining credit and a higher rate.
Why it matters
The rating directly affects your pocket: mortgage approval and the rate you are offered — see mortgage — along with loans and credit terms generally.
Even a small difference in rate, earned through a good rating, is worth a great deal of money over time.
How to check your credit data
This is your right: you are entitled to receive a credit report about yourself, generally once a year free of charge, from the credit data system.
It is worth checking, both to confirm it contains no errors and to understand how you appear to financial institutions. Where an error exists, you can request a correction.
How to improve your rating
Pay on time — loan repayments, credit cards and bills. This is the single most significant factor.
Avoid arrears and bounced cheques.
Do not run your credit to the limit continuously.
Check and correct errors in the report.
Build history — responsible conduct over time is what constructs a rating.
Common mistakes
1. Never checking the report. Errors can be damaging you without your knowledge.
2. Treating "small" delays as harmless. Even a minor late payment is recorded and counts.
3. Chronically maxed credit, which signals risk regardless of your repayment record.
Summary
Your credit data and rating directly affect your ability to obtain a mortgage and loans, and the rate you pay on them. It is worth checking the report, correcting errors, and managing your money responsibly. See more in mortgage and the taxes section. We provide the knowledge — the decisions remain yours.
The information on this page is for educational purposes. Please consult a professional before making financial decisions.
Contact an advisor →