Saving is a solution to achieve future goals and dreams, but on certain occasions, the money saved is not enough to carry out a family project or start a business. For this reason, credit is used, either by loan or by card, which is an operation in which a financial institution lends money to a person, who will later repay it in installments and within a set period.
However, financial analysts consulted by Univision recommend that before requesting it, a series of questions should be asked, such as: Do I need a credit? And what am I going to borrow for?
Is the credit that I am going to request to study? To buy a home? To start a business? To buy machinery or to develop some productive activity? Indebtedness for these activities is positive. But if you are going to borrow only for consumption, you have to think about it better.
Loans and credit cards are a very useful tool. Few people know before going to a bank what kind of factors are evaluated to grant them. The institutions try to mitigate the risk, and for this they do a credit analysis of the people and companies that request financing.
Why is it good to have a credit history?
You also have to know how much that money costs? At what term do I have to pay? And most importantly, can I afford it? Anyone interested in a loan must take into account that it is an obligation that must be met, otherwise, if they fail to pay installments, it will affect their credit history.
Did you know that having no debt is not as good as it seems? That’s right and this is because people who have never had any type of loan cannot prove what their credit history is that details their financial behavior; if he is a good or bad payer.
In turn, banks cannot accurately calculate the risk on new customers due to this lack of information on their financial behavior in the past.
What credit score should you have?
Credit scores in the United States are classified as follows:
- Above 750 points the rating is excellent.
- 650 to 699 is considered sufficient or normal.
- 550 to 649 points is referred to as a poor score. The latter may limit access, but it has possibilities.
However, by not having a credit history when applying for a loan to buy a car, a house or any other good, the bank’s answer may be a resounding “no” and if they approve it, they may grant it at a rate of highest interest rate, explains John Jay College economics professor José Torres.
“Having a history and a credit rating above 700 lowers the costs of loans, interest, makes it easier to buy things and can help in emergency situations when access to credit is necessary,” Torres details.