Loan application can be rejected due to low credit score.
A large population of youth is not hesitant to borrow and spend and wants to maintain a better credit score as well. Due to better credit score, their loan applications will not be rejected. Amit Das, the co-founder of Think Analytics, says that the young population at the moment, their thinking about money and investment is completely different from their previous generation. The main reason for this is that they have got financial support from their previous generation.
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Experts also believe that the young population of this generation has not faced much of the financial crisis of 2008, 2012-13 and 2020 in the beginning of their career.
Due to these effects on credit score
Many factors have an effect on credit score.
- What you are buying and where to buy from affects your credit score. For this reason, to improve the credit score, it is important to pay attention to your expenses.
- Paying late or paying in the long run has a bad effect on the credit score.
- Spending more than a credit card can affect your credit score. Experts suggest that spending equal to the full limit of the credit card should be avoided.
- Canceling a credit card also affects the credit score.
- Having more credit cards is not a wise decision. Having more credit cards can affect the credit score.
- If you want to increase the credit score then it is not wise not to use a credit card. According to Das, whose credit score is poor, they can take the offers of such credit companies through which they have wide choice of shopping. Alternative data is also included under this offer.
Can increase credit score through alternative data
For those whose banks have refused to give credit cards due to their credit history, alternative data option is better. According to Das, this will not only help in increasing the credit score but will also reduce the possibility of credit default. Alternative data is an input that credit bureaus usually do not take into account to produce a score. It includes utility, rent and cellphone bill payment, banking account activity, social media activity, education and online behavior. Experts believe that through this option, the bank will be able to customize new products to enhance the customer experience.
