Credit score is a three digit number depicting credit worthiness. Credit score ranges from 300 to 900, with 900 being the best. Most RBI authorized lenders check credit score when you submit a loan or credit card application. If your credit score is low, then you shouldn’t be surprised if your loan application is rejected. To avail hassle free loans, you should have a good credit score. Having a good credit score is the stepping stone for availing loans and credit cards.
If you have a history of missed payments, defaults, write-offs and settlements, then your credit score would be low. If you have handled debt wisely and responsibly, then your credit score would be high. Individuals with good credit score are issued loans and credit cards at low interest rates and their loan application is processed quickly. If you have a bad credit score, then it’s extremely important for you to improve it in order to avail loans of higher quantum like home loans.
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RBI has mandated credit information bureaus like Experian to allow you check credit score, free of cost, once each year. You can check your Experian credit score free of cost on IndianMoney.com by following the below mentioned steps:
You must identify the factors affecting your credit score and act accordingly. To do this, you must check your credit report on a regular basis. If you have missed payments, then ensure to pay future EMIs well before the due date. If you happen to find wrong entries in your credit report, then you must immediately contact the concerned credit bureau/bank and request for a correction.
SEE ALSO: How to Maintain a good CIBIL Score?
You must come up with a good credit plan. Sit down and analyze your requirements. Avail credit only if it’s really needed. Try to be as self sufficient as possible. Don’t fall for the offers and deals that lenders advertise, they may be a trap. Avail credit cards and loans only when there is a real need for it.
You must be extremely cautious while using credit cards as they are a form of debt. Make timely repayments on credit cards. Try to have limited number of cards and keep an eye on the due date of each card. Don’t utilize the entire credit limit offered, try and restrict your credit utilization to 30%.
If you have a low credit score, then you must avail a secured credit card and use it wisely with timely repayment. Doing so would increase your credit score. Once your credit score improves, you stand a better chance of availing unsecured loans and credit cards.
If you have missed a payment, then you must clear the dues at the earliest. Delayed payments are a red flag when it comes to credit score. You must always keep an eye on the due date and ensure to make payments well before deadlines.
There are chances of wrong entries in the credit report and that’s the reason why you must check your credit report on a regular basis. You must inform the credit bureau on wrong entries. There are chances of identity theft (This is an act of fraudsters using your confidential/financial details to avail loans in your name). If you are a victim of identity theft, then you must immediately alert the concerned credit bureau and bank to look into the issue. If not, then your credit score would keep taking a beating until you do so.
SEE ALSO: How To Get My Cibil Report Online?
If your credit score is good, then you enjoy the benefit of banks approving your loan application quickly, at low interest. You have the liberty of negotiating on the rate of interest, as you have a wide range of banks to choose from.
This is because you have a proven track record of repayment and lenders consider you safe to lend. To attract people with good credit score, some lenders don’t charge processing fees. Some credit cards issued by banks have lucrative deals for those with good credit score. You must explore these options and then make a decision. If you are looking for loan balance transfer, then you must first talk to the current lender and check if he is willing to reduce the interest rate. If not, there are other lenders who are ready to do so at a lower rate of interest.
Having a good or bad credit score is in your hands. If your credit score is bad, then you have no one to blame, but yourself. Building a good credit score is a herculean task. It takes months to build credit score, while just a couple of missed payments would decimate it. You must be responsible in handling debt, make timely repayments and report discrepancies in the credit report to the concerned credit bureau.
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