The renowned and prolific British writer H. G. Wells once said “he who loses his credit is dead to the world”. From a financial point of view, credit is the ability to obtain money by promising to repay it within a set period and under agreed conditions. Therefore, taking a loan is a very serious decision, which if used well will generate future benefits, on the contrary, if it is poorly managed, it will damage your credit history, put your emotional stability at risk and many doors will be closed to you.
Financial intermediation entities, as well as savings and credit cooperatives, must manage various risks, among them, the most fundamental, credit risk, which is the probability that a debtor will not comply with its financial commitments in the terms that were originally agreed. Generally, to carry out an effective credit evaluation, these entities take into account several key elements, among them, the most significant, the debtor's payment capacity and his credit history.
The payment capacity is the capacity of a debtor to generate cash flows that allow it to honor its financial commitments under the initially agreed conditions. For its part, credit history is a chronological record of a debtor's payment behavior in relation to his financial commitments. These two elements define the risk profile of a debtor, especially the last one. Maintaining good payment behavior is key to fostering a low risk profile, that is, for entities to be a healthy credit subject and at the same time profitable. Here are some recommendations to improve your credit profile:
1.Build a good credit history
In order to improve our credit profile, we must have credit. Obvious. For this reason, it is a good idea, from an early age, to be able to access credit cards or small consumer loans to build a solid history. Financial intermediation entities, including savings and credit cooperatives, look very favorably on those people who maintain excellent historical payment behavior.
2. Get a good financial education
To achieve this, it is necessary to have had a solid financial background. A credit card or a consumer loan managed by an irresponsible young person will become a ticking time bomb. In other words, to achieve, maintain and improve our credit profile, a good financial education is required. Good subjects of credit are those who have been able to acquire knowledge, attitudes and tools to achieve good management of their resources from early stages. For this reason, savings and credit cooperatives have had a great rebound in the last 10 years, since they design children's savings programs that over time build members with a drinkable credit profile until their adulthood.
3. Be responsible
On the other hand, responsibility is another key factor in building a good credit profile. When the entity approves a loan, you must do everything possible to honor it, it is necessary to adopt a responsible attitude, since the borrowed money does not belong to the financial entity or the cooperative, but to its depositors, who trust that the organization is making good investments.
4. Avoid over-indebtedness
Once you have achieved credit, avoid over-indebtedness at all costs. One of the risks of maintaining a good track record is that you will most likely receive many offers, many of them tempting, and if we are not careful and prudent, we can make the mistake of taking several credits at the same time, exceeding our ability to payment. If you have already managed to build a good credit score, but you indiscriminately go into debt again, it would be much more difficult to improve your credit profile, as this suggests that you lack the criteria and skills to manage your personal finances.
That is why people who have more than four or five credit cards have a higher risk profile, since the ability to over-indebt is higher.
If you have already achieved a good history, and it is adjusted to your ability to pay, do not exceed your limits by taking more unnecessary loans, assume only commitments that you can pay and try to meet the installments religiously, which will improve your credit profile. .
5. In case of inconvenience, show your face
The best way to improve your credit profile is to pay. If for some valid reason, you cannot continue to honor the commitment (loss of employment, reduction in sales commissions, closing of the business, etc.), you must show your face. Do not try to fix the problem on your own. Be honest, make an appointment with your officer. Explain what happened, so that they feel that you are acting in good faith, so that the parties can find a viable solution. If you have been a good payer, they will very likely give you a hand (this is more feasible, in my opinion, in a savings and credit cooperative, where there is a greater sense of belonging).
6. Stay on top of your credit report
A good practice to preserve and improve your profile is to regularly check your credit bureau report. The Constitution contemplates the right of each citizen to know their credit score for free. Therefore, it is advisable to consult your history at least every three months to protect yourself from harmful inaccuracies or from any identity theft that you may have been a victim of that could negatively affect your credit profile.
7. Cancel unproductive debts
Another way to improve your credit profile is to cancel those commitments of considerable amounts. It is also feasible to cancel those inactive accounts that you are not using (cards and lines of credit). In this way, do not cancel the oldest ones in your credit history, as you would be affecting your financial trail in a certain way.
Your credit profile is your letter of introduction to the financial and business community. For this reason we must preserve it at all costs. Your credit history is a fundamental element for your financial health. A good history that improves our credit profile is a valuable asset to obtain credit and thus take advantage of good opportunities.
In this sense, in our entity, we can help you achieve your goals and acquire a good credit history through PrestaBien, financing with a preferential rate, quick approval and up to 72 months to pay. This is an ideal financing because it adapts to each budget, it does not have so many charges and you can make capital payments without penalty.