
Money usually plays a major role in shaping a person’s life and frame of mind. It always requires mindful planning in the long term to make the best of your life. To upbeat this mindful planning it is important to look at the best available financial opportunities surrounding you.
While life can take unpredicted turns and may surprise you with unexpected financial lows, there are several who opt for a personal loan to meet their financial needs. As these loans often provide urgent support. Nonetheless, it becomes essential to determine what factor makes it best to fit in our lives.
New to some and already known by some- The Credit Score
Whether you want to secure a personal loan for personal purposes, renovate your home, buy a phone, get a home appliance, or pay debts, knowledge about your credit report and score will help you throughout your financial journey. This blog is jotted to let you know everything about credit scores. So, let’s get started.
What is a Credit Score?
A credit score represents a customer’s financial reliability numerically. This score is derived from your credit files, representing your creditworthiness. This file tells about the financial management of an individual at every stage of life. To secure eligibility for your unexpected financial planning, credit score is an influential factor. The credit score ranks from 300 to 900 and helps lenders figure out your loan repayment capability. A credit score of 700 to 900 is generally considered good. A score of 800 or above is considered excellent.
Why do High Credit Scores matter?
Lower Interest Rates:
A good credit score helps you borrow money at lower interest rates.
Better Credit Cards:
A good credit score enhances flexibility for credit cards, making you eligible to get credit cards that offer benefits such as cashback and travel rewards.
Easy Loan Approvals:
While you apply for a loan, your lender finds a valid reason to trust you because of your healthy & well-maintained credit score. They find you reliable for lending money. Hence, it results in easy loan approvals for you.
Longer Tenure Loan Approvals:
Long-tenure loans usually put lenders at higher potential risk. Thus, a good credit score is mandatory for long-tenure loan approval.
Disadvantages of Low Credit Score
Loan and Credit Card Rejection:
Lenders do not lend money to those customers who have low credit scores. Hence, it fosters chances for your loan application and credit card request to face rejection.
Higher Interest Rates:
A bad credit score does not make you eligible for lower interest rates. Thus, it makes you pay more for your loan in the long term.
No Credit Cards, No Rewards:
To qualify for the best credit card offers and rewards, your credit score must be well-maintained. If your credit score is relatively low, you won’t be eligible to experience premium discounts.
How do you build your Credit Score?
These easy tips listed below will help you achieve the best credit score.
Pay your bills on time.
This is the primary factor on which credit score depends heavily. Every late payment can push your credit score down. Paying bills on time reflects you as a responsible borrower and can bring a drastic change in your credit report.
Keep an eye on your Credit Reports.
Review your credit reports frequently and keep checking if there are any inaccuracies and dispute errors. Watching out for your credit score regularly enables you to boost your credit health by taking significant steps of improvement.
Stop frequent credit card applications.
Do you opt for new credit cards frequently? Then, this tip is for you. Frequent credit card applications have a negative impact on your credit score. It is advisable to keep limited cards for your better credit score.
Set up auto payments.
Setting up automatic payments for your monthly installments can make you worry-free. Your installments will always be paid on time without even bothering you. This tip also includes keeping a sufficient amount in your relevant account so you always keep track of your timely payments.
Conclusion
A Credit score is a key role player in your overall financial health. By understanding how it works and taking mindful steps to improve it, you can secure better loan terms and achieve your financial goals.
Chinmay Finlease Limited is one of the leading NBFCs, specializing in lending short-term unsecured personal loans. Our mission is to bridge the gap with our advanced and flexible credit products for salaried young professionals.
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Ranjit Behera