Maybe because it is an issue that does not attract anything, but the reality is that very few people worry about knowing how to obtain a credit responsibly, in fact, it is known that 62 of every 100 people do not have financial education.
And is that, to get out of trouble or just to have money to buy something, many say yes to anyone and do not look at what really matters when they accept to give them a loan.
Then, in the end they end up with a debt that is unaffordable and with a bad reputation before the grantors, with which they manage to “close” the door to more important loans.
So, so that you never go through this situation, we share 11 valuable tips that will help you to know how to obtain a credit responsibly.
1 – What do you need the credit for?
The responsible obtaining of a credit begins from which you decide to request it, so if you already have the idea in your head, put yourself to the test to identify if you really need it or it is a whim.
We say caprice because it is not the same to need a credit to liquidate your credit cards and thus not fall into default, to have “a little more money” and have a good time on the beach.
So, ask yourself this question: Why do I need the credit?
Why, is it worthwhile to request financing?
- Consolidate your debts, either those of your credit cards or other financing.
- To ensure the education of your children or for you to study a postgraduate course.
- To buy a car.
- To take the “big step” of buying your house.
Why is it not worth requesting financing?
- Because the bank offered it to you and it was easy for you to accept it.
- To buy an item or service that you do not need.
- To go on vacation. Better save if you want to travel.
- For a third party to use it. This NEVER do it.
2 – Analyze your income and level of expenditure
Okay, you thought about it with the pillow and if you need the credit. Well, now you need to analyze your spending behavior and compare it with your income, this will help you identify your economic potential.
If you can, print your account statements and compare them with your income vouchers, if not, just remember.
The objective of this is to know how to differentiate between how much money you need and how much you can ask for so that you do not have problems when paying each month or fortnight.
3 – Do not forget your current credits
Even if you have analyzed your level of income and you have noticed that you can request the amount you have in mind, do not get so excited.
The next step is to take into account the finances that you currently have (if you have them), because one thing is to have a good salary and another is to have it available.
We recommend you take paper and pencil and make a list. On the left side you will put each one of the financing you have assets: credit cards, telephony plans, cable television, mortgage, automotive, etc.
On the right side, next to each credit, write down the outstanding balance of each one. Finally, make a third column, to the right of the outstanding balance, and write how much and how you are paying.
4 – Will you be able to have a new credit?
If after making the list you think you have the potential to add another credit to your history, consider a more “obstacle”.
In addition to impulse purchases to which we are all exposed, there are others that we cannot avoid, such as birthday gifts or anniversary details.
Even those expenses that you have not yet made should go into your budget to determine if you will be able to use other financing.
Believe us when we tell you that we have seen “fall” even those who call themselves experts in financing, for not studying every aspect before requesting them.
5 – Put into practice your credit memory
If you do not have a good credit history, it is practically impossible for a grantor to encourage you to borrow money. Nobody better than you knows if you really have opportunities to be approved.
Although at this moment you have economic solvency, the past counts, so remember and think if you have had a problem that has generated a bad reputation.
So, if you know that your history is tainted, our suggestion is that you solve that problem first before applying for the credit, otherwise the only thing you will earn is a visit to your history in the Bureau.
Although for once nothing will happen, do not forget that several visits in a short time to your history in the Bureau deducts points from your Score.
6 – Identify what types of credit exist
If you came to this step, it was time to focus on your credit. Meet them!
Knowing what financings exist will not only help you, obviously, to know what options there are, but also to identify in which cases they are convenient.
Maybe the best known credit. A credit card is the combination of a revolving credit (which you can use repeatedly) and a plastic with which you access the funds.
You can use it in stores that accept this means of payment to buy products and services without disbursing cash.
There are two types of credit cards:
1) Bank cards: Which are issued by banks and, being backed by Visa, MasterCard or American Express, have worldwide acceptance, that is, you can buy in thousands of establishments.
2) Departmental cards: That are issued by specific shops such as Liverpool, C & A, etc., and that you can only use in these establishments.
Personal and payroll loans
These two are also very famous; you have probably heard of them, especially if you have a savings account or in your work they deposit you in a payroll card.
- A payroll loan is a loan whose biweekly or monthly payment is obtained by the grantor from your payroll account. This means that if the monthly payment is 3,000 pesos, this amount will be deducted automatically from what you receive in your payroll account.
- On the other hand, a personal credit is practically the same, with the difference that the payment is not linked to a payroll account, so you will not be automatically deducted from what you receive from salary.
Specific consumption credits
In this category enter credits that you cannot use more than for the specific purpose for which they were created. Some are:
- For business
- For remodeling
7 – Which ones solve your need?
This point is important because here you will discard the financings that flat out do not serve you or do not suit you at all for your type of need.
For example, if you want to stop having eight debts on eight credit cards, the financing that suits you is:
- A credit card
- A personal or payroll loan
Why? Because with the card you can make a transfer of balances, that is, pass your debts to another bank that offers a lower interest rate.
You can see it this way:
Imagine that you have a debt in your American Express card and transfer them to a Santander card, in which you will be charged less interest and thus liquidate it will be cheaper.
In simple words, what happened was: Santander paid for you the debt you had with American Express; now you will have to pay Santander the same amount as you should have but at a cheaper interest rate.
On the other hand, with a personal or payroll credit, what you will do is liquidate the balance of all your cards and now you will only have a debt that you will have to pay to the grantor who approved the credit.
8 – Compare the credits that solve your need
Since you detected the ones that solve your need, look very good at this:
1) Interest rate: It is very important that you identify if the interest rate of the financing offered to you is fixed, variable or mixed.
Do not forget that the higher the interest rate, the higher the cost of the money you asked for, that is, you will pay more each month.
2) Credit term: It establishes the time in which you visualize paying the financing, since, as we mentioned before, the interest rate is fixed based on it.
3) Total Annual Cost: Used to calculate the total cost of any credit. In simple words, it is a percentage that integrates all the elements that in the end you will have to pay (commissions, insurance, interest rate, etc.).
Take into account that, in general, the lower the CAT, the less expensive it is. credit.
4) Forced times: Consult well the conditions in which they offer you the credit, since some institutions, after a certain period, decide to vary the conditions of the credit and the rate.
5) Commissions: Request or manage a financing, usually accompanied by some “extra costs”. For example, opening commissions, unpaid payment commissions and even commissions to advance payments. Get well informed
6) Insurance: The credits often include insurance that, by the emotion of the moment, you end up accepting or you do not reach to listen. Take a few minutes to analyze what they are about and if you are not interested you are not obliged to accept them.
Although from here you already requested your credit, it seems important that you adopt some habits that will make your life easier.
9 – Pay on time!
If you already took the time to know what credits existed, which resolved your need and those, which was the best option, do not go to have payment problems that ruin your wise choice.
Print your amortization table, note the payment dates in your calendar, reminder program on your cell phone, do what you want but, for nothing in the world, stop paying.
Doing so could bring consequences such as an increase in the interest rate or commissions.
10 – Investigate the associated expenses
Part of the responsibility is to know the “little letters”, so do not be afraid to ask, for example, what happens if you want to advance payments, or if your financing includes some insurance.
11 – Advance payments
If there are no commissions and you have the freeway to advance payments, do it. Try not to make “big” purchases and better invest that money in liquidating your credit as soon as possible, this will give you financial and mental health.
It’s your turn!
With the tips that we have just shared, you are ready to choose a truly convenient financing and, at the same time, you will enjoy certain advantages:
- You will have the peace of mind that you do not have debts out of control and that your finances are healthy.
- You will presume an excellent Credit Score, which will keep you as subject to any other credit.
- You will strengthen the relationship with your bank and get benefits: re-financing, increase in your line of credit, lower interest rates, to name a few.
- You will not have labor obstacles, remember that there are currently companies that consult your history in the Bureau to decide if you are a good prospect.