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“No credit bureau and no guarantee” Do short-term loans affect my credit history?

In Mexico, having an extensive and positive credit history opens the doors of many economic and quality financial products . To achieve this, it is necessary to take several years using credit cards, payroll loans, auto loans, or any other similar and, of course, having made payments in a timely manner and having no debts.

The same thing happens with companies. A business with a good credit history will be able to access important amounts more quickly and easily with relatively low interest rates.

The problem is that many entrepreneurs do not meet this requirement on a personal level, much less with their companies, as these are newly created. Some carry problems of previous debts such as stigmas that are not erased from their history and others never worried about building a constant relationship with credit, so, although they have no debts, they have not demonstrated their ability to maintain a healthy relationship with the.

 

What is the credit history?

What is the credit history?

Your credit history is the record that institutions keep of all the credits you have acquired and the credit rating is a numerical indicator of how much you stick to the payment commitments you make. All credit affects your credit history in one way or another, whether you are late with the monthly payments of a cell phone on a credit card or with the monthly payment of a loan of one million pesos. Objectively, we can say about short-term loans that, if you pay on time and form, your credit rating increases, and if you delay or default, it decreases.

 

Are “fast loans” bad for your credit history?

credit score

Many financial institutions offer “no guarantee and no credit bureau” loans, which allow access to smaller amounts of financing quite quickly, even if our credit bureau situation is not optimal. But they have the huge disadvantage of having the highest interest rates and the shortest payment terms, therefore, we will refer to them as “short-term loans”.

Short-term loans do not affect your credit history by themselves, but they put you at greater risk of delinquency because, although acquiring them is easier, paying them in compliance with the terms is not so much, and it is also much more complicated to renegotiate them, because what you could even lose your assets if you are not careful.

 

When and when not to get a quick credit?

quick credit?

If you pay on time and form a short-term credit, your credit history may indeed improve. Only if you are completely sure that you can meet the payment terms are a good alternative. Before making your decision, consider the following key points:

  • Check if it is worth paying interest two or three times higher in exchange for its immediate accessibility.
  • They are not recommended to start a business because the cash flow takes time to appear and that can tighten you with payments, in this case it is better to manage an entrepreneurial loan.
  • They are not recommended to get out of debt, because their interests can get you into a bigger debt.
  • They are not an alternative for current payments, because it is cheaper a business credit line in which you only pay interest on the amount you spend.
  • They are useful to take advantage of business opportunities immediately and with a good return on potential investment.

The question is: are these types of credits the only alternative when your credit history is not perfect or not yet mature?

No. There are many alternatives and you just need to make some strategic comparisons and do some research. Nowadays, in Mexico, entrepreneurial credit is being promoted as never before, which opens up many possibilities to access fair, economic and quality business loans. In Sikitum we help you compare among dozens of alternatives so you can find the credit that best suits you, and we also advise you with the management process, at no cost.