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Why You Should Aim for a High Credit Score

By Finserv MARKETS - Jun 3,2019
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Why should you Improve CIBIL Score

Credit score is not just a number. It is a score regulated by a dedicated governing body that has your entire financial history. According to a CIBIL survey, 74% of Indians check their Credit Score at least twice a year. The same report also published in the Economic Times, states, ‘While 29% of the 1002 urban consumers surveyed said that they do it primarily to improve it, 28% checked to prepare for a new Credit Card or apply for new loans.

What is a credit score?

A credit score is a three-digit number that has records of all your active and inactive debts. It not only has the debt record, it also has your credit card usage history, payments and expenses in detail. A credit score ranges from 300 – 900. 300 being the lowest and 900 being exceptional, an acceptable score for credit cards and loans are 700 – 750.

How do you get a high score?

Your detailed CIBIL report covers majorly the following 5 points:

  • Your payment history
  • The amount you owe
  • The age of your credit history
  • New lines of credit
  • Credit mix

If you want to consistently maintain a good credit score, you’ll have to work on each one of them in tandem and maintain a balanced portfolio.

How to improve your credit score fast:

  • Get rid of dues
  • Maintaining Low Balance
  • Avoid Multiple Queries
  • Low Interest Rates
  • Higher Chances of Approval
  • Higher Limits
  • Power to Negotiate
  1. Get rid of dues

Whether it is a huge credit card bill or small amount. Piling up any of those dues will only lead to a negative impact. Pay all your dues on time.

  1. Maintaining Low Balance

It is suggested that you do not spend more than 30% of your credit limit. Low credit utilization suggest a good financial health and tells that you can manage your spends.

  1. Avoid Multiple Queries

Every time you apply for a credit card, lenders pull out your credit report. Multiple enquiries for credit report from various lenders creates suspicion as lenders think that you are greedy for more and more credit. Hence lenders consider you to be a risky borrower. This leads to a bad credit score.

  1. Low Interest Rates

If you have a good credit score, you will be eligible for lesser interest rates. It also means that you will clear your loans faster.

  1. Higher Chances of Approval  

With a good credit score, no lender will decline your application for a credit card or a personal loan.

  1. Higher Limits

Premium financial products with exclusive rates and higher limits are given only to people with a high Credit Score.

  1. Power to Negotiate

A high Credit Score gives you the power to negotiate for better rates and ask for flexible terms and conditions.

A credit history is not created over-night. With good practise method, even a bad credit history can be turned around.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522