Credit Scores: Use them to your advantage
When it comes to determining your loan worthiness, the importance of a credit score cannot be stressed enough. This is because a credit score is often the most important factor behind the approval or rejection of your loan application. Here, we’ll address all those nagging questions about what a credit score is, why it is considered important, and how to improve your credit score.
What is a Credit Score?
A credit score is a statistical representation of your creditworthiness. It is based on your credit history, which takes into account your loan repayments and an overall view of your finances. In India, credit scores are determined through CIBIL, the country’s first ever credit information company.
Why is a Credit Score Important?
If you have a good credit score there is a definite chance that a lender will offer you the desired loan amount, and perhaps a bunch of benefits too. This is because a good credit score is a direct indication of your loan repayment capabilities.
A good credit score can work wonders for you in several different ways.
Buying a House
Purchasing a house is probably one of the biggest financial decisions you will make in your adult life. A good credit score helps you get a home loan by making lenders more open to dealing with you. For instance, if you have a track record of maintaining a good credit score, lenders will look forward to offering you a loan. This is because a great credit score means the chances of you defaulting on a loan are minimal. Lenders like Bajaj Finserv offer Home Loans with low interest rates and instant approval.
Funding a Business
Any lending institution will first look into your credit scores before signing off on a business loan application. If you have a good credit score your chances of getting a loan will automatically increase. In case you are looking to finance your business, Bajaj Finserv offer Business Loans of up to INR 30 lakh with flexible payment options.
Getting Lower Rates of Interest
A low credit score forces lenders to charge you higher interest rates as they consider lending you money a risky proposition. But if you have a good credit score, banks generally tend to offer you a lower interest rate for the opposite reason.
How Do I Keep a Check on My Credit Score?
There are a number of ways to improve your credit score. All it requires is for you to follow these basic steps.
Repay Your Debts on Time
If you have any outstanding loans, you need to make sure that you follow the repayment schedule and make timely payments. Avoid making late payments as they can impact your overall score.
Avoid Unnecessary Credits
We know that a random call from a bank, offering an attractive deal on a credit card, may test your resolve. Make sure to stay away from such schemes as they can have a bad effect on your credit report. If you are keen on applying for a new line of credit, Bajaj Finserv offer Credit Cards with multiple reward point programmes.
Clear Your Bills
Your history of bill payments makes up about 35% of your credit score. So prompt payment of bills will help you gain the confidence of lenders, as the payments positively reflect on your credit report.
Improving your CIBIL score is quite an easy task, especially if you make carefully weighed decisions and exercise a certain discipline with regard to your finances.