Most of us, who avail loans from Banks / Financial Institutions do not know that 90% of new loans are sanctioned on the basis of credit
score of 700 & higher. The Score is derived from your credit history and ranges from 300 to 900 points. Your credit score tells the lender how likely you are
to pay back loan or credit card dues based on your past repayment behaviour. The higher your score, the more the chance of your loan application getting
approved. How to maintain your Credit Score and keep it always on higher side? Explained Here:
- Ensure all your EMIs are remitted on time. Set reminders to know when they are due. If you have missed an EMI on any loan in the past couple of years, your score takes a hit.
- Even paying Credit Card bills after the due date can have a negative impact. Lenders perceive this as a sign that you are unable to meet your existing financial obligations. To know the credit-worthiness of persons seeking loans, banks exchange information about account-holder's repayments.
- If you are a compulsive credit card user and run up a huge bill every month, it could impact your credit score. Using too much of credit card limit is seen as a red flag and could pull down your credit score. You should pay credit card bills by due date. If you face financial crunch, pay at least minimum of 5% and never overuse your Credit Card limit.
- Secured loans such as home loan, auto loan will help build up your credit score. But too much of unsecured loans like personal loan, travel and credit card loans are most expensive forms of credit. Repaying unsecured loans as early as possible will be ideal.
- Never apply for loans just because credit score is available. Also keep in mind compulsive borrowing is not good for credit score. Credit hungry behaviour indicates that your debt burden is likely to increase in the near term which could impede your repayment capability.
- More Important Tips : (a) Give ECS request for all your loan repayments to your bank. (b) Set reminders to ensure sufficient balance is available in your account when EMIs are due. (c) Regularly monitor your Credit Score just to know where you stand. (d) If you come across any discrepancy in updating your account by the lending banks, inform the credit bureau for rectification.