The Buyt Desk
Do you understand the power of a good credit score? Here is an interesting fact. You can bargain with banks on the loan rate provided if you have a good credit score and a credit history.
A credit score is a three-digit number arrived at on the basis of your credit history. It serves as an index to indicate the probability of default by the borrower. TransUnion CIBIL Limited, a Credit Information company, collates the history of your credit card and loan payments from banks and other financial institutions into monthly reports. Further, CIBIL uses these Credit Information Reports (CIRs) to deduce the credit score. There is no wonder that credit score is also referred to as CIBIL score.
Now, what constitutes a good credit score?
The range of the credit score is between 300 to 900. The higher the credit score, the lower are the chances of default on a loan payment There is an almost 90% likelihood of your loan being sanctioned if your credit score is more than 750.
How valuable is a good credit score?
-
You can negotiate loan rates.
-
You receive a loan with longer tenure or competitive interest rate.
-
You can look forward to faster loan approvals or pre-approved loans.
-
You receive higher credit limits from credit card companies.
-
Recruiters also favor candidates with a good credit score.
Are you aware of your credit score? Well, you can easily find out your credit score with your PAN number on CIBIL’s website.
Having understood the importance of a good credit or CIBIL score, let us discuss how you can improve it.
Pay dues on time
A greater credit score assures your lender that you will repay on time. Timely payment of EMIs and credit card bills builds the credit score and assures the lender of your reliability.
Do not exceed 30% of your credit limit
Interest-free borrowing is an attractive deal. Nonetheless, using more than 30% of the credit limit on your card will hurt your credit score. The best idea is to ask for a higher credit limit if you use a credit card regularly.
Avoid asking for multiple credits at once
Opting for a loan, a credit card, and other debt instruments at the same time will lower your credit score. Credit information companies will see you are a credit-dependent individual. At the least, keep some gap between the two credit applications.
Specific credit build your reputation
There is a bad credit and good credit. Housing, education, or vehicle loan are good credit. However, credit cards and personal loans are not seen in a good light.
Be regular in checking your credit report
There is a possibility of an error in your credit report. It will affect your credit score. If you regularly checking your CIR, you can file a dispute with the credit information company at the earliest and prevent your credit score from wavering.
Do not close old credit accounts
A history of repaying credit on time boosts your credit score. Closing an old credit card account will remove it from the CIR.
Avoid applying for new credit cards incessantly
Possessing multiple credit cards in a short span will hurt your credit score. It again signifies your dependency on credit.
Using the above tips, you can build a credit score above 600 over time. However, you can consult a financial expert for advice on maintaining a high credit score.
