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
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.
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.
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.
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.
Higher Chances of Approval
With a good credit score, no lender will decline your application for a credit card or a personal loan.
Premium financial products with exclusive rates and higher limits are given only to people with a high Credit Score.
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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