Understanding and knowing how to manage your credit history is one of the key factors in achieving a smart and comfortable financial life. In other posts we have talked about how people who have had poor management have been able to improve their credit history over time, and even get the credits they need for different goals in their lives. Now, if your case is that you are starting with your credit history, or you want to know specifically what you can do to improve it, here are tips to improve your credit history.

 

  1. Start by taking out small loans. If you are thinking of acquiring a credit card or simply want to start having a credit history, you have to start by having generated good behavior as a debtor. You have to start somewhere, and this is where microcredits come in. Remember that borrowing from a friend or relative does not generate a record in the credit bureau or credit circle. You must make sure that the microcredit comes from an institution that does report your history to the Credit Information Societies. Remember to pay your debt on time and that’s it, you’ve already started building a credit history. If necessary, repeat this step moderately, and over time you will generate more successful events in your credit history.
  2. If you have a past-due debt, reach an arrangement with the bank or credit institution. When we have an outstanding debt with the bank or credit institution and we cannot make the payments, collection calls begin to arrive from the bank, or in the worst case, from a department specialized in collections and/or legal. In these cases, it is important to have the initiative to speak or go to the bank to reach an arrangement. The bank can recalculate your debt in smaller payments and give you more time. Remember that by paying your debt, you and the bank win: the bank recovers its loan and you recover your credit history.
  3. To reduce your debt. If you have a large or long-standing debt that is only generating interest, you must reduce it in large steps. That is, sit down and calculate your monthly income and expenses. Cut unnecessary payments and consumption. Consider the possibility of creating opportunities in which you can receive a higher income (ask for a raise, generate a business idea, investments, etc.). The money you saved from those cuts, and what you generated extra, put them towards reducing your debt. Over time you will see that the interest will be reduced, therefore your debt will be paid off faster and will be cheaper in the long term. Above all, your credit history will gain strength.
  4. Increase your lines of credit. Are you already successful with acquiring credits and paying them on time? It is time to take the next step. Ask your bank or banking institution to extend your line of credit for your good behavior. Without a doubt, they will review your history and expand your existing line of credit, or give you a mortgage, car, or another loan. This will feed and improve your credit history. Remember to continue with the same responsible behavior that you have had so far.
  5. Open debit cards. Even if you don’t use them very often, having credit cards means that a financial institution is trusting your responsibility to pay them. Of course, always keep her up to date with payments.

 

What can you do with a good credit history?

 

Having a good credit history opens the doors of the world to you. There are a lot of possibilities for you to grow your economy and that of your family. For example, you can obtain a mortgage loan more easily and with a better interest rate. Or if you are creating your own company, although the company as moral personnel acquires a credit to grow, -among other requirements-, the bank takes into account the history of the company’s partners, that is, your individual credit history. You will have access to greater benefits that the same credit cards offer, such as canceling the annuity, obtaining points to later exchange for products or trips.

 

Learn to use the credits in your favor

 

Good credit history is a basis for financial growth. Over time you will see the benefits in your daily life. Many refrain from acquiring credit for fear of getting into debt. Remember that a credit generates a testimony about your responsibility. The more responsibility, the more benefits. Paying your debts on time will give you many more benefits than if you refrain from requesting a loan.

 

Think of potential emergencies

 

At some point in life, we all face an unexpected event. Unfortunately, there are times when these events harm us financially and that is when we need to resort to acquiring loans. If you have a good credit history, obtaining credit will be easy and will help you when you need it most.

 

Conclusion

 

To build or improve your credit history, you need to start with the simplest steps. Micro-credits are an excellent start both for those who have never applied for a loan before and for those who are recovering their history.

Remember that the economic system in which we live is based primarily on the history of responsibility of each individual and/or company. Your credit history is your financial reputation, take care of it.