When you apply for a loan from any loan app, any bank or lender will check your credit score before approving your request for a loan. The higher your credit score, the more likely you are to be approved for a loan. Having a good credit score will help you get loans easily. Lenders check your credit score. Your credit score is a number from 300 to 850 that shows how likely you are to pay back a loan. An imperfect but widely-used measure of creditworthiness, a credit score is calculated from data such as your credit history, debt levels and payment history. While a score can vary widely from person to person, in general, a good credit score is above 700. To have a good credit score, you should meet the above-mentioned criteria.
What Does Improving Your Credit Score Mean?
Improving your credit score is a considerable step that will help you in the future. It will give you better access to loans and other benefits such as lower interest rates.
How to Improve Your Credit Score
So, how do you improve your credit score? There are many ways to do so:-
- Pay your bills on time
- Keep your credit cards in good standing and don’t open too many new credit accounts
- Pay off any outstanding debts, make sure all of your debts are paid off
- Keep your balances low and avoid incurring debt from other lenders
- Don’t close accounts without communicating with the lender first
- Keep copies of important documents like tax returns and bank statements
We must learn and take all steps to repair our credit score if it is negative and keep up with the current financial information on our credit report and visit the credit report bureau every year.
Know Your Credit Report
You should know what a credit report is and how it can affect your life. If you don’t know, you can find out more about how to get your credit report for free online or through CIBIL. A credit report contains information about all of the inquiries made on your credit in the past seven years, which includes when and where you applied for loans or applied for a job, as well as any defaulted debts.
However, if you are applying for personal loan or employment opportunity with a lender or employer, they will be able to access this information before granting the loan to you or offering the position to you.
What is a Good Credit Score?
A good credit score is above 700. It is a number from 300 to 850 that indicates how likely you are to pay back a loan. To have a good credit score, you should meet the criteria mentioned above.
How Can You Raise Your Credit Score?
A good way to improve your credit score is by staying on top of your debt, having a high credit utilization ratio and going through the credit repair process. If you want to raise your credit score, it’s important that you’re not using too much of your available credit (credit utilization ratio). The higher the amount of available credit, the easier it will be for you to get approved for loans. For example, if you want to increase your credit score from 700 to 730, you should keep your outstanding balance below 30 percent and make payments on time.
Revise Your Credit Report
It’s also important to review your credit report periodically. You can get a free credit report from any major credit reporting agency once per year. If you think that any errors or items have been removed from your credit report, you should contact the reporting agency that reported it and ask for a correction.
Secure a Good Credit History
A good credit history helps you improve your credit score. To secure a good credit history, you should pay all of your bills on time and not have any delinquencies or other negative marks within the past few years. If you have been late with a bill or had any other negative marks in the past few years, it is best to start fresh by paying off your debt and getting back on your feet.
Apply For Fewer Credit Cards
You should apply for more credit cards than you think you will use. It’s best to have a few cards with a balance on them rather than many cards that don’t have any balance on them.
When you apply for a loan, the lender will check your credit score before approving your request for a loan. The higher your credit score, the more likely you are to be approved for a loan. Having a good credit score will help you get loans easily. Lenders check your credit score using CIBIL.
Have Less Debt
You should keep your debt levels low. This will help you achieve a higher credit score. Paying off debts is one way to raise your credit score, but there are other ways of lowering debt as well.
If you want to improve your credit score, try to make a few small changes in your budget so that you can reduce your debt. For instance, if you want to save money for an expensive purchase or need a loan for something, consider using a debit card rather than a credit card. This will allow you to save the interest cost while still living within the limits of your finances.
Develop Good Credit Habits
Developing good credit habits is essential to improving your credit score. It’s important that you pay back all of your bills on time and never miss a payment. Other ways to improve your score are by using your credit card responsibly and paying off the balance in full every month.
Zubin is really passionate when it comes to producing content. He produces content on various subjects like finance, insurance, health, sports etc. Other than creating content, Zubin works with a 360-degree digital marketing agency as a Lead Content Strategist for various Websites.
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