What is Credit Score?
A Credit Score is an indicator of your credit worthiness or your ability to repay the debt. It is usually expressed in the numbers from 300 to 900 which is based on repayment history, credit history across different loan types. Higher the score, is better the score. Score more than 750 is always considered to be a good credit score. Banks or financial institutions always access your credit report to identify whether you are eligible for a loan or not. There are high chances of your loan getting approved when your credit score is good. Also, you are likely to get additional benefits, better interest rates, better repayment schedule and faster approval process.
Before applying for a loan from any bank or financial institution, you should always access your credit score. You can place a request online to view your credit score online. If you have a higher credit score, you may be eligible for the best loan offers and with lesser interest rates. All these benchmarks differ from lender to lender.
Here are some tips for you to improve or maintain your Credit Score:
- Pay your Instalments on time: Above all the factors which are considered in calculating your credit score, paying EMIs on or before the due date has a maximum weightage. It is very important to pay instalments on time which helps in building the credit score. Delay or non-payment has an impact on credit score which would have an impact on your chances of loan approval.
- Avoid multiple loans: When you submit multiple loan applications or credit card applications within a short span of time, this would have an impact on your credit score. The greater number of inquiries you have on your credit report, the lower is your credit score.
- Fix Credit report error: Review your credit report thoroughly and see if there are any error which need to be fixed. In case you see any error in the report, do get in touch with the lender and get the same resolved.
- Consolidate your debts: It is a better idea to consolidate your loans so that you have less payments to make. When you have too many loans running at the same time, try and close high-risk loans. Then you will just have one payment to deal with and if you are able to get a lower interest rate on the loan, you will be in a better position to pay your debt faster.
- Avail loans for a longer tenor: When borrowing, always opt for a longer tenure for repayment. This would result into low EMI which you can easily repay on time. Making payments on time will result into improved credit score.
By following the above tips, you can improve your credit score to a great extent. High credit score indicates that you have a disciplined repayment behavior. The credit score improves in some days once you start considering the above steps.