It must be admitted: even with a good education level, most people never got taught about personal finances. Learning about interest rates or purchasing power, and being able to identify whether or not it is convenient to take a personal loan is essential for life. Here we got a few tips to keep in mind.

Taking credits or having debts makes part of the ordinary life of many people around the world. Just think about buying with credit cards, paying a mortgage to acquire a house or borrowing money from any bank to concrete the desired goal (a trip, a house renovation, a new car, etc.). 

However, only a few people take it seriously. Getting into debt can equally work as a great help or as a huge mistake if risky and managed. If you ask for credit but without analyzing the amount to be paid back month by month, then the thing will get complicated. 

 First of all, we need to make clear the concept of “credit risk score”. Everyone has this number which is used as a tool for any potential bank or lender. It depends on a person’s purchasing power, credit records and other personal information. Through it, the institution can determine if it is convenient to offer credit to a certain person. Although this score can define huge aspects of our lives, very little attention is paid to it.

Check some tips for you to consider when being interested in taking a loan, in order to have access to the money, while taking care of your score:

There is no single risk score: while our information remains the same, it is important to know that there isn’t a unique or universal score. Actually, it can change, not only from bureau to bureau but it can also differ from bank to bank, and even may change depending on the type of credit asked for. For example, a person could show a low credit score to apply for a mortgage, but a high one to get a personal loan asked to buy a car. 

It is not that easy to clear a poor score: this is because the credit score was built by years of payment behaviour history which help banks “predict” the customer conduct related to a future loan. That is why your score wouldn’t change immediately even if you pay old and matured debts. Then, the best advice to keep a healthy score is to pay on time and the correct amount.

Every credit agreement must be strictly respected to stay in the green numbers. To do so, you must evaluate if you – and your income – will be able to pay the future bills, especially in this context of high inflation and stagnant salaries.

It takes a healthy balance to create a good credit score: this means that to generate your score, you’ll have to take different credit products in your name, so the institutions will have the information to make the records. Nevertheless, asking and having too much credit can prejudice your level, especially if the records show you are getting to the maximum limit.