Do you know what the credit bureau score is?
Upon graduation, Joaquín began working for a transnational company and shortly after he had his first credit card. However, his inexperience in managing him let his bad payment behavior affect his credit history. Years later, when he partnered with a friend to start an SME and tried to obtain a line of credit to buy machinery and equipment, his application was rejected due to his poor qualifications.
Joaquín’s case may be familiar to many entrepreneurs who want to grow their ventures but cannot do so due to mistakes made when managing their credits. We tell you about others and how they affect and impact your credit bureau.
Things that affect your score in the Credit Bureau
1. Stop paying
This was the mistake that Joaquín made and it is one of the most frequent that a borrower can make, either due to lack of resources or due to poor management of his finances. Stop paying your line of credit is the worst thing you can do since the bank reports such behavior to the Credit Information Companies (SIC), known commercially as Buró de Crédito and Círculo de Crédito, and this leaves a mark on your report, being frowned upon by credit grantors.
It should be noted that no one can delete these records, but by law these data are deleted when they complete a certain period, depending on the case:
- 25 UDIS, plus or minus $133, is removed after one year.
- 500 UDIS, plus or minus $3,809.50, is eliminated after two years.
- 1000 UDIS, plus or minus $4,520, is eliminated after four years.
This period runs from the first time the grantor reported the credits with a delay or from the last time the information was updated to the Bureau.
Debts greater than 1,000 UDIS are eliminated upon reaching six years, provided that:
- They are less than 400 thousand UDIS, more or less, 2 million 55 thousand pesos.
- The credit is not in judicial process.
- You have not committed any fraud in your credits.
These deadlines for deleting the information have been established by the Law to Regulate Credit Information Companies and by the General Rules issued by Banco de México.
2. Request many credits
It is recommended that when you are looking for a loan you do not submit many applications at the same time in a short time with different entities, this because the grantors see it as a risk of falling into over-indebtedness
How do they know? When you request a loan, you authorize the entity to review your history and this generates a record. So when Bank B checks it, they’ll notice that you also applied for a loan with Bank A and Bank C.
This increases the chance of being denied. The ideal is to quote your credits without allowing them to review your Credit Bureau and once you know which one you are interested in, authorize that institution to make the inquiry.
3. Have no credits
If you are a person who has never had a loan and one day you come to request a business type to expand the operations of your business, it is likely that you will be denied. The reason is that there is no way for creditors to evaluate your payment behavior. In addition, the amount you request is likely to be considerable and no one wants to take the risk.
The ideal is to start your credit life with a credit card with a line of credit reasonable and little by little to escalate in more important financing, of course, paying in a timely manner and on time.
Credit is an excellent tool to promote the growth and consolidation of your company and a way that is available to those who request it, as long as they avoid the errors that we have just mentioned.
Originally written for Premo
MORE NEWS:
Entrepreneur.com We are the leading medium for Spanish-speaking entrepreneurs, with the most important news and content on startups and businesses.