There’s no surprise to reveal that a credit report reflects on your past credit transactions. It tells us clearly if we’ve paid our loans on time & took notice of our falters. This substantially helps in getting us another valuable loan.
Understand the value of your credit report through a fresh perspective
As a responsible father, you may have big dreams about your daughter’s education & the best possible upbringing. This leads to another education/personal loan perhaps! However, this time he received a loan rejection intimation from the bank. What do you think could be the probable reason?
It is undoubtedly your credit score which went off for a toss. The bank later informs him that due to poor credit scores the loan application was rejected. The bank then informed him that due to poor credit scores, they disapproved of the loan. So now it’s time to introspect your past transactions & figure the mistakes. Most lending institutions require you have a credit score above 700 or 750. Of course, the credit score of an individual is important, but lenders may also explore other financial aspects.
Let’s take a glimpse at the important aspects that reflect on your credit report :
- Types of credit accounts:
Lenders do not look at your savings account or FDs, they essentially assess your credit standing on the basis of credit transactions only. They look into your Loan accounts, Credit card, Secure & Unsecure debt. Banks/ NBFCs understand the accounts, repayment cycles, and tenure to pay off credit. On the basis of your repayment pattern, they rate your credit better.
- Written off accounts:
If any loan is received & not paid off within the stipulated tenure, then these accounts are pronounced as written off. This is not viewed as an addition to your credit standing, instead impacts your credit report.
- Settled account:
If any of the credit accounts have not been paid fully and some amount still needs to be paid, then it’s still okay. However, if its name as settled, then it surely impacts your credit score. and still has some amount left to be paid. This basically signifies that the individual couldn’t repay the amount on time as committed.
- Open and Closed account:
If an account is still open & needs repayment is known as an open account. This account necessitates timely payment of loans. In contrast, a closed account doesn’t require full payments to be made. No repayment cycle is attached to the account. So with every full payment within its time, your credit report will improve.
- Authorized users or joint loan account
If you’re an authorized user of credit card or have a joint account, then you’re answerable to pay the debt too. And if you fail to make the repayments on time, then it will negatively affect your credit score.
- Guarantor of an account:
If you’ve certified yourself as a guarantor, then you’ll have to make repayments on time. This makes you liable for clearing the debt even if you haven’t used up the credit alone. This is an added burden to yourself & the credit report.
Stay conscious & try to repay all your loans on time & maintain a clean credit report.
Know More on How to Get a Personal Loan with Credit Score of 600-700
