Importance of credit history
Published 01/11/2022
Many people mistakenly think that credit bureaus are deny-lists of bad payers. In reality, it is not so. All of us who have had a loan or have contracted a service offered on credit such as a telephone plan or pay television services might appear in one of these companies, simply because the information they report is concentrated for the grantors of financial products.
Remember that the role of credit information companies is to collect and concentrate information on credit history.
It includes our general data and the information of all the credit lines that we have in our name, opening date, credit limit, current balance, minimum payment, and payment behavior of the last 24 months. There are also data on those credits that have already been settled. It is also recorded if we have paid with a discount or agreement, disrupting the financial system.
In this way, the big difference is how we appear in those societies. If we always pay on time, we handle our credits correctly, and we are also not heavily in debt. Our record is exemplary, and it can open many doors for us.
But if, on the other hand, we have an adverse history, showing irregular behavior or a significant level of indebtedness, even though we are up to date, it can cost us a lot of work to obtain a new loan. And if we succeed, it will surely be costly due to the greater risk we represent.
The permanent responsibility in the payment of services or small credits can be the key to open or close the doors of mortgage financing.
Do you want to buy a house, and they denied you credit because you are in the credit bureau? That is not the reason. All the people who buy on credit or use services such as cell phones or cable television are registered with the credit bureau.
This institution keeps the record of our credit history for the last seven years and, whenever you request a new loan, your potential creditors will consult your history to know if you are subject to credit or not.
That is why your payment habits and the lack of adequate personal financial planning can put at risk one of the objectives most valued by Mexicans: the purchase of a house.
The credit history is one of the most important aspects to obtain credit in a financial institution. The information provided by the credit history is the payment record of a company or natural person. It is a report that indicates whether a loan has been paid on time and how much debt a person or company has.
Having a good credit history is important because it allows the bank to know the willingness to pay a company since it may have a good income but may not be a good payer.
Develop a credit history
A new company or a person who has never asked for a loan should begin to develop their credit history first by opening an account in a financial institution in such a way that it allows seeing the movement of their accounts. The company must have its financial statements up to date and include all the income and expenses. The bank looks for evidence, not assumptions. It is essential to generate evidence with account and financial statements movements.
Debt capacity
As the credit bureau has information on each and every one of your credits, as well as their amounts, the financial intermediaries you go to in search of a loan will be able to check your available debt (payment) capacity. The generality of the institutions takes care that the payment of your debts does not "eat" more than 40 percent of your gross monthly income. Of these, it is acceptable that you allocate up to 30 percent to long-term loans (such as mortgages) and the remaining 10 percent to other types of loans, such as automotive and credit cards.
Contracting more debts would imply increasing the risk of incurring liquidity problems and, therefore, in the punctual and timely fulfillment of your financial obligations. However, some institutions accept a level of indebtedness of up to 50 percent of your gross monthly income. Of course, this percentage already considers what the mortgage loan disbursement that they could grant you would imply.
The past of your money matters
Credit history is a report that allows you to analyze your financial history with one or more lenders or financial institutions that have granted you a loan or that help you to pay for your services.
The people and institutions that review this document will be able to see the behavior of your finances in the face of debt and know in detail the loans you have requested and how you have made your payments.
The best way to know how to manage your finances is to know your financial situation perfectly, take stock of your income and monthly expenses, and thus know your ability to pay.
You mustn't stop paying a monthly payment. If you cannot pay the total amount, try to pay off the minimum so harmful elements are not added to your credit history.
Credit history is your cover letter. This record includes information on credits taken throughout life, outstanding balances (debts contracted with financial entities and commitments acquired with commercial establishments, such as cell phone and cable television accounts), and the punctuality with the payment of obligations.
This situation means that if you have contracted a service or have a product with the entities mentioned above and are judicious in the payment, it will be created in the risk centers with a favorable report, which will allow you access to many benefits.
If, on the contrary, your report is negative, it is time to organize your finances, establish a budget, and, based on it, manage your obligations responsibly.
At El Paisa Multiservices we want to help you with your finances and give you the best advice. You can contact us if you have questions about our services
By Ingenuity & Solutions
