Why So much Hype about Credit Score?
The numerical figures of 700 and above are mounting to become superpower club that forms the basis of the kind of job a person is entitled to credit score, what EMI on the loan he should pay, and what should be the rate of interest on the same.
Surprisingly, it also plays a significant role in determining the marriage eligibility of a person, phone usage limit and much more. Therefore, whether a person is planning to buy a car, a home, or wishes to apply for a new credit card, his/her credit score has a tremendous affect on loan processing and also regulating the credit limit for the same.
What does Credit Score actually mean?
A credit score, in short, is 3-digit numbers which summarise the credit health of a person and his ability to apply for loans in the future. Such score is derived by analyzing the credit history of a person. The rating is done b/w 300 to 900 and higher scores indicate a good credit score.
However, the question here is – “What is a good score?” It is to be noted that a score above 700 is considered as a good score. In India, credit score evaluation is done by credit information companies like CIBIL, Equifax and Experian.
Quick-Witted Ways to Improve your Credit Rating:
There are a number of things to be taken into consideration when pondering about a good credit score:
- Do check your Credit Report: Credit score improvement commences with the credit report. Therefore, one of the primary things to be done is to request a copy of your credit report and check that there are no errors in the same. At times, even banks make a mistake in making entries which will lead to an error. Hence, take the responsibility of your own report and ensure you check it periodically. In case of error, resolve it immediately with the reporting financial institution and the credit bureau.
- Regular Payment of Bills: A number of people are still unaware of the fact that regular payments of bills also play a vital role in improving the credit score. It is to be noted that 35% of the total score depends on your payment history. Hence, it is important to maintain consistency in this area, as well.
- Clear Debt: One of the easiest ways to improve the credit score immediately is by paying off old debts and loans. Some people ignore this fact, especially if the amount is small. On the contrary, it is essentials to get rid of old debts to avoid any red mark on your credit report. It is to be noted that minimization of outstanding debt enables one to improve his/her credit score.
- Less Usage of Credit Cards: Having credit cards makes you an eligible applicant for a loan, but in case the same is in huge number then it will have an adverse affect on your credit score. However, credit scores can be improved by making a limited purchase through credit cards and reducing the number of cards used, as well.
- No Default Payment for Credit Cards: It is very important that all the credit card payments are made on time because this ensures the sound financial condition of a person. This, in turn, will help increase the credit score.
- Timely Payment of EMIs: Pending debts and loans has an adverse affect on the credit health. Therefore, it is extremely crucial to pay them back on time.
To conclude, a credit score can be safely termed as the “financial conduct score” for all your major future endeavours. Hence, maintaining it on the higher side guarantees a comfy future. It is advised that all individuals become more punctual and responsible with relevance to all the aspects related to credit and its payment. If this is done effectively, it will certainly improve your credit score.