You get to understand the real impact of ‘Credit Score’ when you enter the financial market in your life. This three-digit figure holds the entire power to shape your financial journey in numerous ways.
From availing loans to influencing the rate of interest and even potential job opportunities, this score plays a very crucial role.
What is a credit score? How to boost it?
In our country, this score is a numerical representation of an individual’s creditworthiness, measuring their overall ability to manage and repay debts. CIBIL, i.e., Credit Information Bureau India Limited, generates this score for you so that you have a clear picture of where you stand in the financial sphere.
Remember that such a score ranges from 300 to 900, and a higher score obviously indicates a stronger profile, reflective responsible borrowing habits, and timely repayments. This increases the likelihood of loan approvals at favorable terms and conditions.
Your score is dependent on the below-mentioned five factors:
- Repayment History
- Credit Utilization
- Length of Credit History
- Credit Mix
- Recent Credit Activity
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Timely and Scheduled Payment
The topmost influential factor affecting your score is your payment history. Therefore, ensure timely payments on all credit accounts, including loans, credit cards, and utility bills as well. Remember that missing payments or making late payments impacts your score in a negative way. Setting up automatic payments is one of the best options to avoid missing due dates.
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Monitor Report Regularly
Keep a close and keen eye on your report in order to point out any kind of discrepancies that might negatively impact your score. As per the law, one can also avail of a free credit report every year from each of the major credit bureaus in our country. So, scan and review these reports to ensure that things are in the right place at all times.
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Management of Credit Utilization
The ratio of credit used to the total available is known as Credit Utilization. It plays an important role here, so aim to keep it below the margin of 30%. Moreover, if possible, pay down outstanding balances and avoid maxing out credit cards.
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Maintaining Healthy Credit Mix
A diverse credit portfolio, which means a mix of Stashfin credit card, online cash loan, etc, can positively influence your score. Keep in mind that unnecessary applying for credit products to boost score is not advisable. Instead, focus and manage the current ones in a responsible manner.
How Your Credit Score Impacts Your Financial Future?
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Rate of Interest and Loan Approval
In our country, a good score affects loan approval processes and personal loan interest rate. If you have a higher score, the likelihood of loan approval increases. Moreover, individuals with higher scores are often offered loans at more favorable interest rates, ultimately reducing the overall cost of borrowing.
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Credit Cards
These companies in India first take a look at your credit report and then approve or reject the applications. A good score enhances the overall chances of getting approved for credit cards with better benefits and higher credit limits.
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Power for negotiation
If you have an impressive score, it gives you the authority to negotiate when dealing with financial institutions. It basically allows for negotiation on the rate of interest, fees, and terms and conditions for loans or other relevant products.
Conclusion
All in all, this score is a crucial factor that determines your financial future in India. A good one is not just a number; it’s considered a gateway to favorable financial terms for a better living and lifestyle. So, if you are planning to boost your current bad score, just follow the above mentioned tips and you are more than good to go! Also, keep in mind that the score also plays a crucial role when you are planning to avail an instant loan.
Download Stashscore App to check free cibil score: https://bit.ly/stashscoreapp
Read More: Factors Influencing Personal Loan Approval: Credit Score, Income, and More
