Credit Score If we want a loan or credit card, then for this we have to improve our credit score. Generally a credit score of 750 or above is considered better. You can improve it in some easy way.
Our credit score is definitely checked while taking a loan or credit card. Generally, if you maintain a credit score of 750 and above, it is considered a good score. Individuals with such scores are considered by banks to be more creditworthy, and hence, are more likely to get a loan or credit card. Many banks have started adopting credit scores as part of their risk-based pricing exercise while setting interest rates for their loan applicants. Hence, people with higher credit scores have more chances of getting loans at lower interest rates.
However, if you have a low credit score, you can improve it. Let us know about some of the ways through which credit score can be corrected.
Credit report check
Credit bureaus use data related to one’s current outstanding loans, past credit accounts, EMI payments, new loans and credit card applications, etc., while calculating the credit score. Therefore, any mistake on the part of the bureau or the lander, or any fraudulent credit application or transaction made in someone’s name, can adversely affect the credit score. The best way to detect such mistakes or fraudulent activity is to check the credit report. Such mistakes or fraud should be reported to the concerned credit bureau or lender for rectification. Once corrected, the report automatically shows an improved credit score.
Avoid direct loan inquiries from the lander
Whenever one applies for a loan or credit card, the lender obtains the applicant’s credit report from the credit bureaus to evaluate his creditworthiness. This request initiated by the lander is considered a hard inquiry and lowers the credit score by a few points. Therefore, those planning to take a loan or credit card should use the online lending market place to compare different credit options as the credit report requests initiated by them do not lower their credit score. .
Loan payment on due date
Of all the factors used to calculate credit score, the most important one is the timely payment of loan and credit card dues. Hence, you can improve your credit score by making timely payment of credit card dues and EMIs.
Credit Utilization Ratio
This ratio is the ratio of the total loan limit availed by an individual. Try to keep it within 30 percent. Because by exceeding it, it seems that the person wants to take too much credit and thus, it lowers the credit score.
