In the last few years, there’s been an unexpected spike in the consumer products, which has greatly impacted credit scores & credit reports. It’s just not the banks or NBFCs which take credit score as qualification. This has created huge awareness amongst consumers looking to take credit score through financial institutions.
What is a credit score?
A credit score is a 3 digits numerical which is computed by Credit Information Companies & furnished to the applying bank/financial institution. It clearly depicts the creditworthiness of an individual or the ability to make repayment of the borrowed amount. It ranges from 300 to 900 points and a score of 700-750 is generally considered good.
Here, the most important question is what if you don’t have a credit score at all?
A recent survey reveals that a whopping 30% do not have a credit score only. Basically, these individuals have never availed credit products like a credit card, personal loan, etc. Therefore, they have no records to refer to, specifically with 4 prestigious credit bureaus in India.
If you want to build a credit score in 2021, we will help you to achieve a good credit score in the shortest span.
For any loan, credit card, the financial institutions will need to check your credit score. And to have built a credit score, you need to availed a loan or credit card.
Are you puzzled? Let us explain better how to build a credit score so that you can apply for loans.
Below are the best ways to build a credit score on the basis of your financial status.
- Salaried professional:
When you get a job, your company opens a salary account where your income gets credited. This is exactly when the respective bank checks on you for credit products if interested. If you’re still a newbie with respect to credit, then it’s good to consider this option. When a bank already knows your professional background, it’s much easier to grant a credit card without looking at the score.
Ofcourse, your credit limit will depend on your income level & risk policies. So, the credit you vary between Rs. 25,000 to Rs. 30,000 on the lower side, while it could go upto Rs 10,00,000 to 15,00,000 if your capacity is slightly better. A good credit standing will help manage your borrowings efficiently to avoid over-spending.
As a fresher, you should get a single card & use it for essential like groceries, fuel, clothes, etc. to manage well. Once the statement reaches you, make complete payment before the due date.
Every payment will keep adding to your good credit history and finally makes up your total credit score.
- Self-employed
If you’re self-employed, make efforts to create a good working relationship with banks or financial institutions, based on which you will be offered credit products.
- Credit Card
Several banks offer special credit cards for professionals like Doctors, Architects, Company Secretariats, etc. Typically, they have benefits pertaining to their profession & special advantages. You can also check with your primary bank to see if they offer credit cards.
However, if you like a regular credit card more, go for it. Any bank will welcome you with arms wide open, if your income & tax return docs are in place.
- Vehicle / Home Loan
Another option to build your profile is to take up a vehicle or home loan. Even if the loan amount is low and repaid in time, it leaves a good impression. The same applies to home loans where basis your financial health, the amount is determined. Both home loan and vehicle loan give you long-term stability and responsibility unlike unsecure loans.
A few quick pointers to build a good credit history:
a) Don’t use up your entire credit limit
b) Pay your EMIs and credit card bills timely
c) Do not apply for multiple credit products at a time
Be mindful of checking your credit score and credit report. This brings about discipline and money management into your habits.
Download the Home Credit App and build your credit powerfully in the 2021.