Credit history: Why is it key to your finances?

The importance of credit history when applying for loans: How does it influence interest rates and lender confidence? Discover it here

MEXICO.- In the complicated world of personal finances, one of the most enigmatic and determining elements is the credit history. But do we really know what it is for and why it is so crucial?

At a recent home loan meeting, a casual conversation between two applicants shed light on the relevance of this mysterious factor.

In a brief dialogue, it was revealed how credit history can be the key that opens or closes financial doors. When applying for a loan to purchase a house, one of the applicants was congratulated for his solid credit history, backed by timely payment of his credit cards.

This gave him the possibility of accessing a loan of 5 million of the local currency, with a 8% interest rate.

However, the story changed drastically for the second applicant, who had never used his credit card. The lenders, not having a credit history that demonstrated their ability to pay, offered only 1 million, but with an interest rate of 20%.

In the face of disbelief, the explanation was clear: The lack of credit history generated uncertainty about the applicant’s reliability regarding payments.

In the tumultuous world of finance, having a good credit history is not just a matter of “status“, but a determining element when accessing credits with favorable interest rates.

Those with no or poor credit history could find themselves with closed doors or, at best, interest rates that would make any debtor shudder.

The takeaway is clear: following the advice of financial experts and building a solid credit history can mean the difference between accessing affordable loans and competitive rates or facing adverse financial conditions.

So, the next time someone asks you, “What is credit history for?” The answer will not only be in obtaining a loan, but in the possibility of obtaining it under favorable financial conditions. Stay on top of your finances, build your credit history, and prepare to open the doors to a stronger financial future.