How is the scoring or credit score calculated?

What is credit scoring?

The credit score is a score that people accumulate and is related to how they behave financially. That is, how they handle the money they receive and how they comply with the obligations they have contracted will be taken into account.

This score can vary throughout a person’s life and several factors influence to increase or decrease this number.

In Argentina, several companies are in charge of storing the historical information of the users and generating with this data the ranking of scores that all banks and financial companies consult before granting you a service or risk product.

How is the scoring or credit score calculated?

The calculation that gives a credit score is based on different variables, all related to the behavior that people have in the financial field.

Although each company uses different methodologies and algorithms, they all have certain similarities and usually make up a table that ranges from 1 to 999, in which the highest numbers are the best to aspire to, while the lowest indicate the highest. risk of default.

The factors that most positively and negatively influence credit scoring are the following:

  • Demonstrable income: although the amount you earn may have a relative impact, what matters most is that you have a proven income and how you spend that money.
  • Compliance with the payment of debts on time.
  • Quantity of financial products contracted.
  • Diversity of banks or companies of which you are a client.
  • Financial seniority.
  • Refinancing balances: a common example is the minimum credit card payment.

Other variables can affect your score, but the above are the most important and on which you should focus.

What is it for?

The bank scoring is used to determine how risky it is to grant a person some product to be paid in installments such as a personal credit or a card.

100% of banks and a large part of the companies that offer financial products evaluate the score of a client before accepting an application. This parameter is then used to evaluate if the user will return the money at term and consequently what limit is going to be granted and under what interest rate.

As a reference, scores below 300-350 are considered bad scores, while scores above 750 are within the best possible scoring range.

But do not be discouraged, having a low score does not mean that they will not grant you money, it can only make it more difficult or charge you higher fees due to your level of risk.

Is it convenient to have a high credit score?

Definitely yes. It is always positive to have a good credit history and a high score.

As we said before, a high-risk scoring will give you greater benefits: lower interest rate, higher limits or amounts, and even more variety of products.

For example, if you have a high credit card score, you may be able to access premium lines such as the famous black or platinum without even having the income required for this type of plastic.

It will also be used to apply for loans of high amounts such as a mortgage or car loans.

How can I find out my credit score?

In Argentina, there is the Personal Data Law that guarantees access to the information of each individual. That is why all companies that manage databases must in some way provide people with the data they have about it.

The best-known company that provides details of the user’s score is True. Once every 6 months, you can request a free report through this company’s website.

In addition to Veraz, other companies also provide credit score reports. Among them is Nos, which also offers information on people’s credit history free of charge. If you want to check the Nos scoring, read the step by step in our guide.

How can I improve my credit score?

As we have been mentioning, to have good credit health and accumulate a score, we must comply with a certain behavior in the financial field.

Here are the factors that can improve your score:

  • It is essential to always pay your obligations on time. The penalties for late payment or non-payment are not only economic but also affect your credit scoring.
  • Keep your debt level below 30% of your income. We mean that the sum of loan installments or card statements does not exceed a third of what you earn per month.
  • Avoid refinancing the credit card or falling in the minimum payment. Accumulating debt on your card is not recommended at all, especially since you are also adding onerous interest.
  • Having demonstrable income and seniority is one of the main factors taken into account in financial scoring.
  • If you work in black, you can still request a savings account at any bank and start using the services. This will give you seniority as a customer and after a while, they will offer you other products that will make you add a score.
  • If you have banking products, use them more often. Add automatic debits, pay with a debit card, make investments and use your credit card wisely.

If you keep these fundamental principles in mind, you will be able to improve your score and access better credit conditions.

What makes my score increase or decrease?

Indeed, several of the above points are those that can positively or negatively affect your risk scoring.

For example, if you always pay a loan or credit card installment late, your score will be reduced. Also, if you leave unpaid debts for more than 60 days, you begin to affect your history and this will also affect the score.

Keep in mind that not only is your behavior considered with typical banking or financial products but it can also affect, for example, if you made a purchase in a store and did not pay for it.

Many companies report their debt histories to these companies as Veraz or Nos, so bad behavior in other areas can also have negative consequences on your score.

Can I get a low-scoring loan?

This is a very common question that our users ask us and the answer is yes. You can take out a loan with a bad credit history or low score in a few minutes directly at iwi.

Although banks are very strict with their credit policies, financial companies are more flexible when analyzing credit scoring and accept user profiles with low scores and even negative records.

How can I prevent my credit score from going down?

Keep your banking products active. Take advantage of the installments or discounts and pay with a credit card. Request new products or even acquire services from other entities as long as you can pay them and do not accumulate debt.

I added the invoices to the automatic debit so you do not forget to pay it and you do not incur arrears. Remember to avoid leaving a balance pending payment so you do not affect your score.

Having good behavior will make your score maintain and even increase, in addition, this will bring you greater benefits, lower costs, and more variety of products at your disposal.