Your credit score is a very important number when it comes to applying for a loan or a credit card. It helps to decide your ability to repay the loan and is given high importance by various financial institutions. Having said that, it is not possible for an individual to get a high credit score overnight. In order to build a stable credit score, you need to have strong financial discipline.
Listed below are eight habits will help your way towards building maximum credit score.
• Minimal utilization of credit
• Monitor your credit
• Diversifying credit
• Always pay bills in full
• Do not close credit accounts
• Do not become a loan guarantor
• Reduce hard inquiries
Minimal utilization of credit
Not many people are aware of how high credit utilization can have an impact on your credit score. When it comes to using a credit card, you can actually spend as much as you want to but within the designated limits. However, there are consequences of using a lot of credit and this is something you need to be aware of. You need to use your credit card keeping this fact in mind and make it a point to use it only when it is necessary.
Punctuality, especially across credit card payments and loan EMIs is a sure short way of increasing your credit score. This in-turn will help the lender to get a better view on your creditworthiness and subsequently lead to quicker approvals.
Monitor your credit
It is important to check your credit report from time to time in order to build a high credit score. It will help you identify any issues or mistakes in the credit report and you will be able to take action and get such errors corrected. You can also check CIBIL score for free using our smart financial health check tool. If there are any discrepancies in the credit report, you can get it rectified on time.
Your score can get restricted due to a single credit history. Hence, it is important that you diversify your credit portfolio in order to ensure your way towards building highest credit score. E.g. instead of using only a credit card, you can also have a personal loan, a home loan etc. It is important to note that individuals with different types of credit generally have a higher credit score than their counterparts.
Always pay bills in full
Various banks/financial institutions ask you to make minimum payment on the total outstanding balance of your credit card. This definitely helps you avoid interest penalties but the same can have an adverse effect on your credit score. Many banks or financial institutions do not rely on applicants who only make part payments on their existing credit.
Do not close credit accounts
One factor that influences your credit score is the period of credit. A long credit history signifies your repayment behavior over a longer time period as well as the amount you owe. Hence, if you have an old credit card account that you have handled properly with regular payments, you should avoid closing it. This will in-turn have a strong impact on your credit score.
Do not become a loan guarantor
When you become the loan guarantor for somebody, it will have an impact on your credit score. It happens because if the person delays or does not pay the loan then your score drops with theirs.
Reduce hard inquiries
Every time you ask for a copy of the credit report, you have a soft inquiry that does not affect the credit score. However, if the bank or a financial institution asks for a copy of the credit report, it will lead to a hard inquiry.
You need to keep in mind that your credit score will reflect on your spending and saving habits. You need to take the steps to make the lenders believe that you can manage your funds well and have the ability to make the Bajaj Finserv loan repayment on time without any default.
Also read how credit monitoring works only at Finserv MARKETS
Benefits of a good CIBIL Score:
A credit score, also known as CIBIL score, is a numeric value ranging from 300-900. A high credit score would indicate that you are a responsible borrower with good repayment history. A CIBIL score of 750 or above is considered to be an excellent score and increases your loan eligibility significantly. Below, we are going to have a look at some of the major benefits of a good CIBIL score.
Since financial institutions check your CIBIL score before approving the loan application, a good CIBIL score can enhance the chances of your loan approval.
Lenders may consider you a low-risk borrower if you have a good credit score. Therefore, quick disbursal of the loan amount is yet another advantage of having a high CIBIL score.
You can avail a higher loan amount at a comparatively lower rate of interest if you have a good credit score.
A high credit score would reflect your good repayment capacity. Therefore, good credit score will allow you to negotiate with your lender to get credit with more favorable terms.
With a good CIBIL score, you can get exciting credit card offers from all banks. These cards may have higher credit limits, amazing offers, and cashback.
Now that you are aware of the various benefits of having a good credit score, ensure that you work towards improving your credit score. Also, you should check CIBIL score before applying for a loan. This will reduce the rejection chances of your loan application.
With Finserv MARKETS, you can choose from a variety of loan products to help you meet your needs and requirements. What’s more? The entire process is completely online and hassle-free. So why wait? Head over to our website, and use your credit score to avail a Bajaj Finserv Bajaj Finserv Personal Loan, today!