Guide to Building a Good Credit History

It can be said that credit history is a measure of a customer's reliability in the eyes of financial institutions today. A good credit history increases the chances of loan approval with better interest rates. In this article, PTF will provide a detailed guide on how to effectively build a strong credit history, helping customers achieve their financial goals more easily. Let’s explore together!

1. What Is Credit History?

Credit history is a record of all borrowing activities of an individual or business at financial institutions. This information is stored in the system of the Vietnam National Credit Information Center (CIC).

CIC is responsible for updating, compiling, analyzing, processing, and issuing warnings regarding financial status both in Vietnam and internationally. Based on the credit history data provided by CIC, financial companies or banks evaluate and decide whether to approve a loan request.

2. Why Is It Important to Build a Good Credit History?

A good credit history plays a vital role in the loan approval process at reputable financial institutions for the following reasons:

2.1 Higher Loan Approval Limits

Customers with a good credit history are highly regarded by financial institutions for their repayment ability and financial reliability. As a result, they have a better chance of being approved for loans with higher credit limits.

2.2 Easier Installment Purchases and Renting

Many retail stores and landlords review a customer's credit history before approving installment payments or long-term rentals. Therefore, a trustworthy credit history increases the chances of obtaining credit with simpler conditions.

2.3 Lower Costs with Attractive Interest Rates

Financial institutions and banks prioritize and trust customers with a good credit history, offering them lower interest rate loan packages. This helps customers reduce borrowing costs, ease financial burdens, and optimize their loans.

3. How to Build a Good Credit History

To establish a strong credit history and enjoy long-term financial benefits, customers can follow these key steps:

3.1 Pay Bills on Time

Timely repayment of credit loans and other bills is crucial for maintaining a good credit history. Consider these "golden rules":

• Pay at least the minimum amount due: If a customer cannot fully repay the outstanding balance, they should try to pay at least the minimum required amount before the due date. This includes credit card bills, rent, utility bills (electricity, water, etc.). By doing so, they can avoid late payments without negatively affecting their credit score.

• Seek assistance from financial institutions if necessary: If a customer faces difficulties in making payments, they should immediately contact the financial institution’s support center for guidance.

3.2 Use Credit Cards Wisely

Proper use of credit cards is essential for building a strong credit history. Here are some key principles for effective credit card management:

3.2.1 Keep Credit Utilization Below 30% of the Limit

Credit utilization ratio refers to the percentage of available credit a customer has used compared to their total credit limit. Most credit reporting agencies use this ratio to calculate credit scores.

For example, if a customer has a credit card with a limit of 50 million VND, they should aim to keep their outstanding balance below 15 million VND (which is 30% of the 50 million VND limit) to maintain a good credit score.

3.2.2 Avoid Opening Too Many Credit Cards

Although having additional credit cards can increase the total spending limit and improve the credit utilization ratio, opening too many cards within a short period can negatively impact credit history. Therefore, customers should carefully consider whether a new credit card aligns with their financial needs and capabilities.

3.2.3 Diversify Loan Types

In addition to credit cards, customers should have different types of loans to demonstrate financial management experience and reliability in the eyes of financial institutions. Diversifying loans can also help improve credit scores.

PTF - A Leading Financial Company in Vietnam Offers Various Loan Packages with Attractive Interest Rates for Customers to Consider.

3.3 Monitor and Check Your Credit History Regularly

By frequently reviewing their credit history, customers can identify any errors or suspicious activities and address them promptly. This habit not only improves credit scores but also enhances approval chances for future loans.

In conclusion, building a good credit history not only makes loan access easier but also unlocks numerous financial opportunities. Apply the tips from this article to improve and enhance your credit score today.

A strong credit score will help customers access loans from PTF with better credit limits and exclusive offers.