Financial freedom essentially means living life on your own terms and without frequently worrying about your money situation. One instrument that can help you achieve the financial freedom you desire is a loan. However, you must have a good credit score to secure credit in any form. This article will tell you how you can achieve your financial freedom with the help of your credit score.
When you have a credit score above 750, a bank will happily give you a loan as it is an indicator of your creditworthiness. You can use these loans in various ways to pave the path for financial freedom.
For example, home or property loans can help you make real estate investments, which can help you earn rent income in the short term and help you grow your money by way of capital appreciation in the long run. You could also take a business loan to set up an enterprise of your own. Or, you can even use these loans to make equity portfolios or invest in mutual funds. Direct equity or mutual fund investments can help you fetch good returns and help you earn dividend income, provided you hold on to it for at least a few years.
However, if you do not have a good credit score, a bank will not approve your loan request. This means that you will hardly be able to either invest in properties, start a business, or invest in the stock market if you do not have sufficient funds already. We will now take a look at the three key steps you can take to maintain or improve your credit score, which could be the key to your financial freedom.
Make the best of your credit opportunities: It is important that you use your credit limit wisely and cautiously. We would also recommend that you maintain a healthy mix of secured and unsecured loans. Additionally, try and not go beyond 30% of the credit limit assigned to you and avoid applying for loans and/or credit cards frequently. Such events are documented in your credit report, which will give a lending institution the impression that you are a credit hungry individual.
Make timely payments: To maintain or improve your credit score, it is important that you make timely payments against the equated monthly instalments (EMIs) on the loans you are honouring currently. Also remember to pay your credit card dues on time. Credit reporting agencies like CIBIL and Experian record this data and add it to your credit information report. Timely payment on outstanding credit obligations is an indication of a healthy repayment behaviour. A healthy repayment behaviour is appreciated by every lender as it tells them that the borrower is a financially responsible and credit-worthy individual. If you are considered to be credit-worthy, a bank or a non-banking financial institution will grant you a loan with little to no hesitation.
Assess your credit information report regularly: It will only benefit you to keep tabs on your credit score and your credit information report on a timely basis. Checking your credit information report regularly will help you spot any errors or misprints. These errors often impact your credit score negatively, which could make it hard for you to secure a loan. If you spot such errors, you must report them immediately by following the agency-specific procedure.
If you have a healthy credit score and have been thinking about attaining financial freedom, you can check out the several loan options available on Finserv MARKETS. You can take a look at a host of business loan, home loan, or personal loan options which are provided by our lending partners. As a user of Finserv MARKETS, you can receive benefits such as competitive interest rates, flexible loan repayment tenure, and balance transfer facilities. Apply now and take the first step towards your financial freedom!