Building a credit history is like cultivating a garden: it requires patience, care and an understanding of the critical moments when you need to act. This garden mirrors your financial reputation in the financial world and can be the key to your dreams - buying your first home or launching the business you've always wanted.
What is credit history, and why does it matter?
Credit history is the history of all the loans you've ever had, including credit cards, loans, mortgages and other types of loans. It shows whether you have made your payments on time, how much you owe and how much you have used your available loan.
Importance
Credit history is significant as it influences the decisions of banks and financial institutions regarding granting loans and setting interest rates. A good credit history can make accessing loans with lower interest rates and more favourable terms easier. In contrast, a bad credit history can lead to rejected loan applications or less favourable loan terms.
What to do to keep it positive?
- pay your instalments on time: late or non-payment can negatively affect your credit history;
- keep debt levels low: use an average level of the available credit limit;
- only take advantage of new loans for specific purposes;
- follow the payment schedule, which can change according to the NBM reference index;
- choose the loan that best suits your needs.
What can you do if your credit history is less positive?
- check your credit report: get a copy of your credit report from the credit history bureau. Make sure the information is accurate and complete.
- pay your debts: if you have outstanding debts, try to pay them off as soon as possible. Over time, this can improve your credit history. Negotiate with creditors: you can try to negotiate with creditors to set up a payment plan or reach an agreement on the debt. Some creditors may grant you facilities to restructure your debt effectively.
- consult a financial adviser: consult a lending specialist for personalised advice and guidance in dealing with loan problems.
Recommendations
Always create an action plan with a strict budget and payment plan to keep income and expenses under control.
Beware of the impact small mistakes can have on your credit history.
Don't use your loan for non-essential purchases or purchases you can't afford.
Educate yourself about money management and responsible lending.
