A person’s credit history is the information that details whether a client’s financial obligations, such as credit cards, personal or mortgage loans, were canceled or not on time.
In this way, paying off debts on time is not only important so as not to be reported negatively in a risk center, but also represents a guarantee that you are a good payer – that brings additional advantages.
In addition, having a good financial reputation allows you to know the ability to pay to determine how much you can pay monthly when entering into an obligation with a banking or financial entity.
In that context, we present four main advantages that are accessed when personal finances are ordered:
Access to loans
If you ask for a credit card or other type of loan (be it cash, vehicle, mortgage), the bank will check that you do not have a past-due debt.
In that sense, nowadays all the banking entities review the profile of the candidate to the loan, being the credit history one of the first filters to determine whether or not he is fit for the loan.
New offers in banking entities and better interest rates
It should be taken into account that the credit history of a person includes information from all banking institutions, who send the information on a monthly basis to the Superintendence of Banking, Insurance and AFP. Credit score comparison is the best way to know if you are eligible for new offers.
Therefore, being up to date with the payments is a good letter of introduction. When the time comes, start having links with another bank since this will also allow for better interest rates in the new offers that the user receives.
Enter an important company
If you are in the job search, it is important to consider that if you decide not to pay debts owed to creditors, you are very likely to be disqualified from some selection processes.
Currently, many organizations have included credit history reviews as part of their candidate’s background check policy. This is because they want to know that their next workers are not delinquent.
Extension of the credit line
What is desirable here is to have a higher credit line to make purchases of larger budgets, having good financial behavior is important so that the credit provided increases.
If you have a good credit history, the bank is willing to offer you a larger loan, even at a lower rate, or increase your credit card line.
Many companies take credit history into account when selecting staff, regardless of the position they want to fill. It is even an impediment to access academic scholarships.
Good credit history may also open a lot of business opportunities for you because negative credit history can be an obstacle if you want to run for bids or contests. After all, it is not attractive to many companies.
Here are some additional tips that you must consider:
Importance of having a good credit profile
Credit history usually goes unnoticed by an average person who seeks to acquire plans, credits or even cards to increase their level of consumption. The worrying thing is that the lack of financial education for natural persons is daily bread and, on many occasions, you can choose loans with a high interest due to the bad credit score or, even, not being able to grant it, given the high level of risk.
What is known as credit history is simply the reliable record of how a person handles debts throughout their existence. The report will be positive to the extent that a person pays his debts on time, and uses less time to time out, or fails to comply. But if it tends to be of the people who leave the payments for a cut-off date, or if it is one of those to whom the memory makes a bad play, your report will begin to fail and may appear as a person with a very high risk. It will make it difficult for you to access credits that you want to acquire in the future.
Many people, when applying for some type of loan, often cross their fingers to avoid being reported, but what they do not notice is that this is not a matter of chance. The risk centers do not intend to act as inquisitors of the debtors or as a fright that appears every time someone wants to take a loan to make their dreams come true or fulfill their monetary debts.
What these entities do is collect a large amount of information from different sectors to know what the credit history is that a person maintains and thus establish a probability of being granted credit, based on their ability to pay. That is, they function as entities that monitor the credit sector to function as optimally as possible, with the least possible risks. If a person appears as “bad pay”, it is an unquestionable risk for the sector and it will certainly begin to appear on the blacklists of these private entities, which ends up encouraging people to seek informal credit channels.
The important thing is to set aside myths about how risk reports are managed to access or not access credit. This is actually a measurement that works under a statistical model, whose objective is to predict the likelihood of compliance of a person in the payment of their obligations. Experts simply refer to this as a score.
How can you improve this particular score?
What is most recommended to people is that they be timely in their payments, avoiding late payments that add debts due to late payment. Also, technology today gives us the advantages to adhere to automatic payments and avoid the excuse of a bad memory, since it is very common to forget the specific payment dates.
However, some tips that are more related to the financial education that a person should have should be prioritized. In this, it is important to maintain a balance below the money available to spend, to avoid that usual practice, which is to borrow above what can really be paid. This only perpetuates their obligations
There are a number of benefits of having a good credit history. Before taking a loan, evaluate what monthly amount you can pay and consider how much time you can pay. The credit history or record is the cover letter to the financial institutions, as it reflects whether a bank (or cashier) client is punctual with the payment of its fees.