How to Manage my Credit Responsibly?

Review some basic financial concepts to maintain responsible debt over time.

Credits are a financial instrument for individuals, families, and companies that seek to invest in better opportunities and quality of life.

Just as they can be an effective means to achieve goals, mismanagement can compromise the expected well-being.

When talking about responsible debt, it implies being aware of the ability to pay and the factors that intervene in the credits, which is why it is necessary to have sufficient information before making a decision.

You must consider three basic concepts to start a financing process:

• Payment capacity is the possibility of borrowing without falling into arrears and attending to the home's needs. It is calculated by subtracting expenses from income.

Calculation: Income - Expenses

• Degree of indebtedness: this allows you to determine what percentage of income is used to pay contracted obligations or debts. To assess your degree of indebtedness, add your monthly debt payments, divide it by your net income, and multiply by 100. If the result is less than 30, you have an adequate degree of indebtedness. Otherwise, it is not recommended.

Calculation: (Sum of debt installments per month / Net income) x 100

• Credit record: It is a rating that the regulatory entity provides to people to determine whether or not there is a risk of granting a loan. It considers the level of indebtedness, days of delay in payments, and the general historical behavior in credit management.

In addition to these concepts, for your future economic well-being, you must understand the charges associated with credits, such as late payment interest, administrative costs, and policies, which will be part of your monthly fee. Once you take credit, consider healthy practices like:

• Preparing a payment calendar and prioritizing them in your budget.

• Avoid assuming new debts to pay others.

• Beware of ant expenses, which threaten to disturb personal finances and can affect the money allocated to pay the loan.

Contact: Mario Barboza | mbarboza@grupocomeca.com