A good credit score can make or break your loan application. Whether you’re applying for a personal loan, car loan, credit card from a bank or NBFC, a good credit score says a lot about your financial character.
You can say that your credit score will speak on your behalf to banks. A good credit score rating is between 750 and 900. Some banks might ask for a higher rating, but anything below 700 is considered bad and tends to be rejected for most loan applications.
Benefits of having a good credit score
There are several benefits of maintaining a good credit score:
- You can negotiate for a lower interest rate if you’ve a higher credit score rating.
- You can get your loan application approved instantly and processed at the earliest.
- Your credit card application will be accepted readily. You can apply for a new credit card without any hassle.
- Some banks can get your pre-payment charges and processing fee waived if your credit score rating is good.
How do I maintain a good credit score?
There are several ways to maintain a good credit score. First, make sure to pay your credit card dues and equated monthly installments (EMIs) on time. Make sure you don’t take up too many loans or credit from banks.
People who take up too many loans with high rates of interests are usually perceived as negative by banks in the context of the repayment procedure. This makes banks hesitant to lend you money.
Having a balance between secured and unsecured loans is the key to a better credit score.
You shouldn’t utilise your full credit whenever you borrow credit from the bank.
Things to Avoid:
Don’t keep multiple balances on several cards. The more credit cards you have and the more you use them, the lower your credit score rating will be.
Don’t apply for multiple credit cards or loan applications in the same year. The more you borrow, the higher the interest rate you have to pay and the more responsible you need to be. Banks tend to associate multiple loans with high risk borrowers.
The history of your credit report is important too. Make sure to pay all bills on time and that you don’t default on payments.
Finally, make sure you don’t close unused credit card accounts. This can also lower your credit score rating. Maintain a good credit score by using them as infrequently as possible and keeping them open.
Having a good credit score is one of the first steps to ensuring that you can bargain with the bank when it comes to interest rates. The more your interest is, the more leverage you have to try and get a better interest rate on any future loans that you may take.
