A good credit history and a high credit score are very important. They allow you to borrow with good terms and low overpayments, so it is important to keep your history and score high. If you do this, you will be able to afford major purchases if you can’t save up for them.

Credit history is an important indicator for financial institutions. It is information about the financial activity of the borrower.  It includes data on credit obligations and their fulfilment. It also includes information about debts and repayment of loans and credits. Especially whether payments have been made on time. A credit rating is an indicator that reflects a person’s solvency and payment history.

What is taken into account in a credit history

When evaluating credit history and calculating a credit score, different indicators are taken into account. Some of them are:

1. Timely payment of debts. Compliance with loan and credit card repayment deadlines is taken into account. Late or missed payments negatively affect your credit rating.
2. Credit history. The length of previous loans and frequency of use is also taken into account. A long credit history and responsible use of credit leads to a higher credit rating.
3. Debt level. The ratio between the amount of debt and the available credit limit can affect the credit rating. Maintaining a low debt level and responsible use of credit will have a positive impact on the rating.
4. Types of credit used. If you have different types of credit, such as consumer loans, credit cards or mortgages, it is good for your credit rating. Experience with different types of credit and a good history with each is important. This strengthens your credit rating.
5. Credit enquiries and applications. Every time you make a credit enquiry or apply for a new loan, it can have a slight impact on your credit rating. A large number of enquiries or requests in a short period of time can cause concern to financial institutions. This can have a negative effect on the score.

How a credit score can be calculated

Different schemes are used to calculate a credit score in the Philippines. Credit organisations evaluate the information they receive from financial institutions. This is how the rating is determined. Each scoring model may have its own scale and evaluation criteria.

Maintaining a good credit history and a high credit rating can have significant benefits. This way you can get a loan with lower interest rates and better terms.

To ensure a good credit history and a good credit rating, we recommend:

1. Pay all debts on time and in full.
2. Use credits responsibly and do not exceed your credit limit.
3. Avoid high levels of debt.
4. Maintain a balance between different types of credit.
5. Limit the number of credit applications in a short period of time.
6. Check your credit history regularly and alert the credit bureaus of any errors or inaccuracies.

Thus, credit history and credit score are very important. Maintain a good credit history and a high credit score. This will increase your chances of getting loans with excellent terms in the future.