Financial institutions do not lend to all but good customers. The definition of a good customer at financial institutions may vary slightly, but one thing is common to all – applying for a credit history, which is like a financial discipline.
This luggage content forms the overall picture of the customer – you will be a good, average or poor customer. The main things that financial institutions pay attention to are income and credit history. This guide is for greens about little-known credit history.
What does credit history consist of?
It is a mirror of financial opportunity. It displays two-part information. The first part is the financial commitments. These include various types of credit in banks, consumer credit companies, mutual lending platforms, leasing and more.
This information helps the lender evaluate the flexibility of the client’s budget, ie what percentage of the proceeds is spent on existing loan installments. The second part of your credit history is your payment history. It tells the lender whether the credit payments and other bills (telephone, internet, cable TV, etc.) are due.
Do I have a credit history? Credit history is information. She’s more eloquent than it may seem at first glance. If you have never had a credit, leasing, or credit card, and have never been billed to service providers, you may get the impression that your credit history report is blank. Make no mistake.
This is also information for the lender. On the one hand, for a financial institution, this may be an indication that you did not need to borrow or buy by installment. On the other hand, do you have the most trust: a proven customer who has had a car lease, borrowed a home renovation and paid all their installments on time, or a newcomer who has never had a financial obligation? A bank survey conducted by My Simon Wheeler showed that banks consider clients with a financial obligation to be more predictable.
Good and bad credit history
Financial institutions tend to be more trustworthy with clients with a good credit history and therefore generally offer more favorable financing terms (lower margins, lower collateral, etc.).
According to the Swedbank Institute of Finance, good credit history can save you interest in the tens of thousands of euros by borrowing a home. Borrowing a car worth $ 5,000 can save up to $ 500 and buying a car worth $ 10,000 can save up to $ 1,700.
How do I fix my bad credit history?
This can be due to a number of reasons, including excessively high levels of financial commitment, excessive borrowing, unpaid borrowing, and late payments. If the financial discipline CV is not good, beware that it will not be “cosmetically” corrected or deleted. Will have to go swimming. If your CV is poor due to the high level of your financial liabilities, it’s time to reduce it, limiting your credit appetite without spending a while. If your CV is poor due to late payments, it is advisable to pay them faster and avoid late payments.
How long does it take to improve? Financial institutions typically assess the customer’s credit history over the past two to three years, so the influence of past “spots” is gradually diminishing. Therefore, if you have a poor credit history and decide to look at liabilities differently from today, you may still have questions about your financial behavior in the past in financial institutions over the next couple of years.