Before giving some recommendations on how to improve credit history, we consider it necessary to define what it is, in case anyone has any doubts.
According to ProUsuario, credit history can be defined as the record of all the financing you have had during a certain period, along with their status and payment behavior. Include the names of companies that have given you credit, as well as credit limits and loan amounts.
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Your payment history is also part of this record. If you have delinquent accounts, bankruptcies, or legal claims, these can also be found in these types of reports.
Influencing factors:
Payment history. This represents 35% of your score. This shows whether you make payments on time, how often you miss payments, how many days after the due date you pay your bills, and when was the last time payments were missed.
Amount owed. It constitutes 30% of the score. This is based on the total amount you owe, the number and types of accounts you have, and the ratio of money owed compared to the amount of credit you have available, whether in loans or credit card.
Age of credit history: Represents 15% of your score. The older your history of on-time payments, the higher your score. New loans with a short payment history may temporarily lower your score, but loans that are closer to payoff may increase your score because they show a successful payment history. Remember: Always request your balance letter.
credit mix: Make up 10% of your score. Having a mix of accounts, including installment loans, home loans, and credit cards could help improve your score.
New credit Makes up the last 10%. If you have opened or applied for many credit products, this could suggest a possible financial problem and could lower your score.
However, credit scoring models are also designed to recognize that consumers looking for a loan are not necessarily an additional risk.
What to do if your credit reputation is badly affected
Evaluate the reasons that led you to misuse or overuse your credit (vanity, bad investments, ignorance, maintaining a lifestyle above your income capacity).
Make a payment plan: Organize all your debts from lowest to highest and, depending on your income, pay capital. If you have informal debt, get out of it as quickly as possible so you can focus on formal debt.
Talk to your officer: Do not hide, talk to your officer and tell him the economic situation you are going through and that you want to find a solution to this.
When you have paid off and they still deny you a TC, request one with an economic guarantee that allows you to continue using the credit, this time with more intelligence, using a maximum of 50% of its limit and make a full payment.
Be consistent in the payments of your services, pay all your commitments on time (electricity, telephone, internet, etc).
You can place a recurring reminder on your calendar with the payment deadlines. If you still do all this and can’t figure out what’s going on, seek professional financial advice to avoid falling deeper.
