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5 Simple Ways to Maintain a Good Credit Score

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Your credit score is a determining factor when it comes to getting approval for financial services such as a loan or credit card. It is a number between 300 and 900 that summarises your creditworthiness, thus helping financial institutions gauge your repayment ability. Therefore, a good CIBIL score improves your eligibility when you wish to avail a loan, for instance, and also gives you the power to bag a lower interest rate.

Does your Credit Score Affect your Home Loan

Your credit score becomes all the more important for an unsecured loan, where there is no collateral for the lender to fall back on. So, it’s best to check your cibil score before you apply, and maintain it to boost your eligibility. Take a look at the 5 easy ways to do so.

Repay your EMIs and credit dues on time

Repaying your EMIs and dues promptly increases your CIBIL score significantly. As your payment history makes up 30% of your CIBIL score, delaying or defaulting on repayments causes a major dent in your CIBIL score. In fact, a delinquency of 30 days can decrease your score by 100 points. Irregularity in debt payments not only impacts your score, but is also noted in your credit report, and can hinder your future loan approval chances as lenders are likely to view you as irresponsible.

Keep your credit utilisation ratio below 30%

Credit card utilisation ratio measures your credit usage against the total credit limit available to you. You must always strive to keep this ratio below 30%, else you come across as a credit-hungry individual. For example, if your credit card’s limit is Rs.1 lakh, then you must avoid spending more than Rs.30,000. Credit bureaus usually pull down your credit score by a few points if you breach the 30% mark. If you use your credit card often to make big purchases and are diligent with repayment, it’s best that you request your issuer for a higher credit card limit to keep this ratio in check.

Continue using your old credit cards

If you have old credit cards that you do not use, avoid the urge to close them. Credit card issuers stop sending updates to the credit bureaus when you close your cards. This leads to the credit scoring formula placing less weight on the inactive accounts. This, in turn, reduces your score due to the shortened average age of your credit. Moreover, apart from lowering your CIBIL score, closing your credit cards decreases your total available credit, and thus affects your threshold of expenditure as well.

Check your credit report often for discrepancies

Errors and omissions in your credit report reflect on your score by decreasing it. You must bring mistakes, be it an error in the EMI payment date or a missing entry, to the credit bureau’s attention as soon as possible to prevent further damage. In a nutshell, one way to maintain or increase CIBIL score is to check your credit report often, go through it thoroughly, and report discrepancies or omissions, if any.

Avoid back-to-back loan applications

Every time you apply for a loan, the lender requests your credit history from the credit bureau in order to evaluate your creditworthiness. This process is known as a hard inquiry and can impact your CIBIL score negatively, reducing it by 3–4 points each time. Therefore, multiple simultaneous loan applications bring down your score drastically and also portray you to be greedy for credit. So, it’s in your best interests to apply for loans after checking the eligibility terms of the lender and ensuring that you meet them.

More importantly, check your credit score before loan applications. If it is below 750, then improve it and then apply for the loan. You can check free CIBIL score online once a year through the official CIBIL website or through Bajaj Finserv’s website. If you wish to do so more than once, you can do so by paying a fee.

Once you have an excellent credit score, you can avail services like loans on simple terms. For instance, with a score above 750, you can qualify for a Personal Loan apply from Bajaj Finserv easily, provided you are an Indian resident between the ages of 23 and 55 years, work in a reputed public/private company and earn a regular salary. Meeting these minimal terms can help you borrow up to Rs.25 lakh for a flexible tenor extending up to 5 years. The NBFC also offers finance on the go via the Flexi Personal Loan facility. Here interest is charged on a daily basis only on the utilised amount instead of the entire loan amount.

Make sure to check your pre-approved offer from Bajaj Finserv after building your credit score to avail instant financing. The customised deal enables you to access funding within hours of document verification in a hassle-free manner.

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Shelly Lane is a dedicated blogger. She love's to explore new things and share that on her blogs. She joined this platform to increase the reach & interaction with the users on this platform. Moreover, she has written 100+ blogs on various platforms related to various topics and categories. Follow on Twitter to them.

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