Did you know that there are loans that do not affect your credit history because they do not report in the Credit Bureau? As you read it, not all financing alternatives or cash loans impact your credit score, that is, the score you have assigned to the Credit Information Companies (SIC).
The fact that a person is not a candidate for financing by a banking institution may be for several reasons. The most common are related to negative reports in the Credit Bureau , risky credit behavior or simply that they are not banked and are part of 25% of people who only have access to informal credit.
Formal and informal credit, what is that?
There are formal and informal credits . To easily identify these groups, I can tell you that the former refer to the money granted by an institution established as a bank. The second type of credit refers to everything that is not part of the financial system; For example, when a family member or friend makes you a cash loan or you go to a pawn shop.
Other examples of informal credit are the money that your company lends you and that you are discounted as a worker directly from your payroll. In this case, if the operation is not supported by a banking institution, then it is also not reported. In addition, the debts you acquire with an institution that does not report to these entities, such as traffic fines, do not affect the history.
Informal credits do not affect your credit history
Once we have identified the second group of credits, it is easier to point out that, since they are not established institutions that qualify you before the Bureau , they do not have a positive or negative impact on your credit history and, therefore, do not affect directly the score that institutions review before granting a loan.
However, resorting to these alternatives is not entirely good, since maintaining an informal financial life does not drive you to obtain attractive credit conditions . For example, in the future you will hardly be able to access auto or mortgage financing if you decide to become independent or start a business.
In addition to the fact that it will be difficult to comply with the requirements to be subject to credit and to represent a moderate risk for any institution if you do not have a good credit history, an important point to consider is that, in the event that a financial person agrees to grant you a loan, The interest rate that will apply will be very high and you will only put your personal finances at risk of falling into debt.
There are other non-bank loans that do affect credit history
According to public information from the Credit Bureau, not only are banking institutions or credit card issuers reported in your history, but also lessors, auto finance companies, mortgage companies, department stores, commercial companies and communication service companies.
This detail can be found in the Credit Summary section of your credit history, there is the status of each of the bank, non-bank loans and other information companies such as cell phones, pay television and even some tax debts that are had with the Tax Administration System (SAT).
Now that the picture is clearer and that we know more in detail the type of credits that impact, positively and negatively, our credit history reminds us that no matter how small the financial commitment may seem, we must pay on time.
At the end of the day the credit is not bad , the really negative thing is when you acquire a financial commitment that you cannot pay or ignore its conditions. Keep in mind that fast loans may seem like the solution to that emergency, but does the interest rate suit you? How will your pocket resent it? Better, know the status of your personal finances, find out and decide.