Approval of loan/credit card depends largely on credit score.
Your CIBIL Transunion Credit Score is a key determining factor of your loan approval nowadays, therefore you should understand the credit assessment process and strive to improve it.
Ideally, a credit score above 750 is considered excellent by almost all the financial institutions. If your score is above 750, Lenders would approve your loan easily.
The better the 3 digit score, the lower the interest rate, which helps you save money as you are most likely to be offered a competitive rate, whether it is a personal loan, home loan or any other loan.
Let us quickly look at, how we can improve credit score:
5: Timely Repayment: Ensure you keep a check on your payment due date and the make timely repayments. Repayment history is looked at very seriously by lenders and credit bureaus.
It is advisable to pay the full balance every month as improve your credit rating. If by any chance you can’t make the full payment then, you should pay the minimum amount due at least.
4: Limit your loans/credit cards: While it is good to have a mix of credit in your name, it is also immensely important that you don’t overdo it. Bureaus keep a factual record of your loan accounts and regularly assess your risk appetite, therefore, don’t be a risky customer by taking unnecessary credit.
Bureaus keep a factual record of your loan accounts and regularly assess your risk appetite. Don’t be a risky customer by taking unnecessary credit.
3: Credit Utilization: Watch your credit card balances every month. It is important to keep a check on your credit utilization as it plays a significant role. It is advisable to keep it between 30% to 40% range. Don’t utilize the credit limit too much, it may have a negative impact.
It is advisable to keep it between 30% to 40% range. Don’t utilize the credit limit too much, it may have a negative impact.
2: Frequency of credit/loan applications: Don’t apply for credit cards or loans too frequently as it has implications on your credit history. Every time there is an application, your credit score is reviewed and it leaves a footprint.
If you are planning to apply for a home loan in the near future, you may want to reconsider your decision.
1: Awareness: Keep checking your credit score regularly and dispute any irregularities or errors with your lenders. The goal should be to keep your credit score above 750 which empowers you to negotiate for better interest rates.
When it comes to home loans, every single basis point matters as it increases or decreases your EMI. Savings would be substantial if your credit rating is excellent.
So you would have now realized how important your credit score is. Start improving your score and save hard earned money.