Why improve your credit history
If you are about to apply for a loan, there are certain recommendations that you must take into account in order to present yourself to any financial institution and obtain a yes. One of them and perhaps the main one is to improve your credit history, since it is one of the requirements that they evaluate to be able to know if you are a good candidate for financing or loan.
To give you a better idea on this topic, access to credit is now said to be limited by those who request it, according to a study we conducted on the importance of the credit bureau. And the truth is that this happens because the requirements that the institutions that grant loans, such as a bank or a financial institution, request are to analyze the viability that exists on the part of the client to be able to offer money.
Below we will explain in more depth how they evaluate your credit history and what information is important, as well as the benefits you can obtain if you can improve your credit history.
Why do they review the credit history?
A bank or institution dedicated to offering loans reviews the credit bureau to be able to know your credit history. But remember a bit that it is not bad to appear in the Bureau, because each and every one of us who have had a credit card, a department or a loan are there.
That is to say, at the moment in which we started to handle any type of credit the company “Credit Bureau” records all the information about them. From what institution you have lent, the amount, interest, term to the exact date and form in which you make the payments to settle.
That is why having a good credit history is important, because if a bank or finance company realizes that you know how to properly manage your finances and you are a constant and punctual, you will not hesitate to say yes. Since that shows that there is a high probability that you continue in that way and the risk you represent of not paying is lower for them.
What information about your credit history is important?
Of all the detailed information that shows your credit history, there are three important points that quickly give an indication of your financial behavior.
# 1 Credit Score
The credit score is a rating that is granted according to the management you give and that goes from 300 points to 850. 300 being the lowest and 850 the highest. For example, if you are at 580 points which means “regular” you increase the chances of obtaining a yes.
# 2 Due balances
In the same way you can know which balances are past due and which ones are still pending. Here it is important that you know that they also show the date in which each payment is due and how many days you have been waiting to pay. For example, if you took 3 days from your cut-off date, there is a section that shows that or also if it is already a total debt due.
# 3 Amount of credits with which you account
Another important indication that shows the history is the amount of credits with which you account. Well, if for the bank or institution it represents a high amount, they will think twice, regardless of whether you are punctual, because there is a risk. For this case, check what credit cards you could stop using or even cancel.
Benefits of improving your credit history
Obtain credits or financing
By improving your credit history, being punctual, paying off your outstanding balances and having control over your finances, you could have obtained a loan or financing without major problems. Although another advice is that you are very aware of your ability to pay, limiting yourself to using what you can actually pay.
Be a creditor of better offers regarding credit
Another benefit that gives you a good track record is getting better credit offers. That is, when you realize that you are a good candidate, you decide to increase the amount offered and lower the interest rate or adjust the term to a more convenient one for you.
Now that you know why it is important to improve your credit history before applying for a loan, you can start with small actions that will make a difference. For example, create a payment plan in which you have control of the due dates and the amount you pay.