A credit score is a 3-digit numerical summary of your credit history. Your credit score ranges anywhere from 300 to 900. The applicant’s credit score is computed using his/her credit report, which is nothing but a compilation of the applicant’s repayment history and related personal info and activities. A strong credit score can offer various benefits, while a poor or bad credit score can lead to missed credit-linked opportunities.
Apart from this, a credit score is not only crucial for the credit seeker but also is one of the crucial parameters that assist financial institutions, banks, and lenders in deciding whether to turn down or accept the application request for credit. In other words, a credit score shows your financial health and is one of the key parameters factored in by credit lending institutions. May it be any lender, a credit score is an important factor considered. ICICI Bank CIBIL score, Bajaj CIBIL score or other lender’s CIBIL score requirement is 750 and above.
Here in this blog, you will learn about all the crucial practices responsible for avail an improved or good credit score:
How can you enhance your credit score?
The methods listed below can assist you in enhancing or ameliorating your credit score. However, if such methods are not responsibly followed, they also can reduce your score.
It is crucial that you do not miss any of your credit payments to ameliorate your credit score and credit profile. When it is about loan or credit repayment, lenders, banks, or other institutions always assess your dependability. A strong repayment history shows how you have performed over the long term and how committed you are when it is about your credit-linked habits.
CUR (credit utilization ratio)
One of the crucial practices for ameliorating your credit is to utilize your CUR wisely. For this, it is recommended to keep your CUR within 30 percent of the available limit on credit cards. Using a higher CUR percentage shows your reliance upon the borrowed proceeds. In case you end up using more than 30 percent of your CUR, ensure to reach out to your existing creditor for an additional credit card limit.
Avoid making multiple hard inquiries.
Note that hard inquiries are those lending institutions conduct each time when applying for a credit option. Such inquiries, in a short time span, severely damage your credit score. Holding a damaged credit score leads to loan application rejection, and a rejected application is filed in your credit report. Altogether, several hard inquiries, loan application rejection and negative impact on your score is a never-ending loop. Thus, in place of falling into this trap, it is recommended for you to repay your acquired loan EMI before you apply for a fresh loan or make the inquiry.
Fix the errors
A credit report without any errors can assist you in ameliorating your credit score. As an outcome, it is advised that your report is considerably reviewed at least twice a year. In the event of any issue, error, misinformation, or comment in your report, it is best you file the dispute and get the issues resolved at the earliest. It is essential to remember that any type of incorrect info reflected in your report can damage your score considerably.
Credit card maintenance
The next important medium to ameliorate your score is to maintain or use your older credit cards for a longer time period or until you manage them.
Ensure to be disciplined
Applicants must not do the listed things to attain an improved or good credit score –
∙ Missed payments
∙ Delayed payments
∙ Partially settling credit amount
∙ Leaving outstanding balances
∙ Placing applications for new credit options instantly after previous loan applications are rejected
All the above parameters have a negative effect on your score and can lower your chances of obtaining various credit opportunities. To avoid this situation, you must do the listed:
∙ Choose the auto-debit option
∙ Set reminders for credit card payments and loan EMIs
∙ Pay off your debt before the due date
∙ Seek the advice of a professional to attain more clarity
Check for your credit score.
An applicant must review his/her credit score regularly to gain an understanding of his/her credit performance. Reviewing your credit score has 2 benefits:
∙ If an applicant holds a strong credit score, he/she must sustain or continue to ameliorate it.
∙ Applicants with slightly fair or fair credit should work hard to ameliorate their score.
Place new credit card application.
An applicant must not place an application for a new card unless necessary. Attaining multiple cards simply adds to your debt and makes it tough for you to repay your credit within the required time period. Moreover, if payment is delayed or missed, it can impact your credit score adversely. As an outcome, applying for a new card with zero intention of using the card shows you are intentionally harming your credit score.
It is crucial to strike a balance between unsecured and secured credit options to ameliorate your credit score. Striking a healthy balance between 2 shows your responsible approach to managing both loan types.
Frequently asked questions (FAQs)
How can you place the application for a personal loan?
You can place the application for a personal loan through Paytm mobile application. All you require to do is click on the option ‘personal loan’ under the section ‘my Paytm’ on your Paytm home screen. Simply include in a few of your personal details as asked, and your eligible loan amount will be displayed. In case the suggested loan mitigates your requirements, go ahead, and enter further details like the preferred EMI option and others. Also, you will be displayed the interest and overall amount that you will require repaying. Once you have authenticated all the crucial details, click on the option ‘get loan’, and the loan amount will be included in your savings bank account.
Having a CCJ in your name can significantly lower your credit score and seriously impact your ability to get credit so it’s important you know what to do and what could happen if you are served with a enforcing a ccj.
What factors must be considered when applying for a personal loan?
When applying for a personal loan, you should consider different factors like your financial situation, including parameters like how much loan you require, what rate of interest best works for you and how much time you will be able to repay your loan considering your upcoming and current expenditures.