credit-score

Economic difficulties, informality and unemployment are just some of the obstacles that have kept thousands of Colombians from meeting their payments and thus accessing new credits.

However, there are entities that provide credit opportunities to these users. Who mostly improve their scores and manage to return to healthy levels of indebtedness.

According to the financial company Bay port Colombia, which has been offering payroll loans for ten years to people with reports in credit bureaus and high-risk profiles, this type of user “manages to improve their payment behavior by having a second chance,” explained Lillian Perea. Bay port CEO.

The banking sector, due to its structure and regulation, has traditionally focused on granting loans to people with high credit scores, a rating -technically known as a score-that ranges from zero to 1,000 points and that evolves depending on the responsibility, the compliance with the payments of the agreed quotas, the level of indebtedness of the people, cell phone payments, cable subscriptions, among other factors.

A study by this financial company, carried out in partnership with Experian, showed that, on average, 79% of payroll loans granted by traditional financial institutions were disbursed to users with a score above 630, which indicates a moderate risk.

According to this investigation, Bay port Colombia found that many of those users. Who cannot access the banking system are part of its client list. And that, due to this new opportunity that they provide, these people have managed to improve their credit score by up to 40%. The study showed that Bay port clients, with a score in the range of 150 to 260 points. Located in the subprime and near prime category increased their score by 29% in six months and 40% at 12 months.

Thus, they went from being at a very high risk level to a high risk level (261 to 300 points) and, in turn, to medium-high risk (301 to 340 points) and a prime category. In fact, 61.5% of loans originate by Bay port are grant to clients with a score of less than 630. “This is our intention, that people who for whatever reason had problems with their credit score can return to the path of responsible payment of their obligations and, in this way, access new opportunities through our portfolio. We believe in second chances”, added Perea

How is the credit score measured?

The credit behavior, that is to say the responsibility with the payments of the financial products, has a greater relevance than it is believed. The financial information centers analyze the payment behavior. That users have with products from the financial, cooperative, Telco and real sectors. These variables generate a score called score and place it in a risk profile. A scale of how risky it is to lend money. Which defines whether they are eligible to access new loans or other products.

Importance of credit score

Having a credit score is not something that you can simply take for granted. Instead of focusing on the technical parts of your credit score. It’s more useful to think about your holistic picture of the credit report. The credit report gives you a great picture of your financial health. But it also reminds you that some things may be better as well. For instance, it’s important to think about your overall financial health, not just your credit score.

Everyone has a credit score. It’s probably not much different from the credit score. That you see on your credit report, but what you don’t see is the whole story. It’s rare that someone gives you an accurate credit score before they offer you credit. What you may not realize is that you have a lot of risk factors attached to your credit score. The fact is that the credit score is only as good as the information you provide to the credit bureaus.