Avoid These Steps If You Want To Have A Good Credit Score
A good credit score of 750 or more is important as it allows you to get quicker and more affordable sanctions on your loan and credit card applications.
This is because lenders deem an individual with a good credit score highly credible, who has lower chances of defaulting on a loan.
A credit score, to put it simply, is a number that sums up your debt history and your past repayment behaviour.
So, to maintain a good credit score you must learn to manage your debts well. To put this into action, you must avoid the following steps.
Do not ignore Existing Loans
When you plan to improve your credit score, the first thing you need to do is to pay off your existing loans.
If you have multiple debts and are struggling to meet different EMI deadlines, you can pay off all your loans by availing single loan against property for debt consolidation.
You can opt for Loan Against Property from trusted lenders like Bajaj Finserv and avail an amount up to Rs.1 crore (if you are salaried) and Rs.3.5 crore (if you are self-employed) on a nominal rate of interest.
When you plan to foreclose your existing loans to improve your credit score, you can use the loan against property foreclosure calculator to compute your savings and plan your repayment.
When you repay this loan in a timely manner, your credit score will further increase.
Do not miss Bill and EMI Payments
To avoid a bad credit score, pay your dues on time every single month. This is for two reasons: it helps build your creditworthiness and reliability as a borrower and it helps you avoid any overdue or late payment charges. If you default on EMIs consistently your credit score will be adversely affected.
Do not Apply for Excess Credit
The amount of debt you have directly influences your credit score. If you already have a large number of loans in your financial portfolio, you should avoid taking on more.
If you take more than you can afford to, based on your income, your credit score will be negatively impacted.
This happens because your income is strained and because you come across as credit hungry.
Additional Read: Consolidate Credit Card Debts with Mortgage Loans
Do not let your Credit Utilisation Ratio Increase
Credit utilisation ratio is the amount of credit you use every month as compared to your credit limit.
When you utilise all or most of your credit limit, you again come across as credit hungry. This reduces your score. When you lower your reliance on credit, your score will increase.
Do not Mismanage your Debts
If you have multiple loans with different EMIs and due dates, manage your debts effectively. This will reduce chances of default or delays in your EMI payments thanks to you keeping track of deadlines.
You can use various apps and online calendars as well as automated bank transfers to do this. Further, pay off more expensive debts or that with the higher interest first.
This will help you prioritize your repayment. Paying off your debts on time will boost your credit score.
When you follow these steps, you can achieve an ideal credit score of 750 or more. However, improving your score will not happen overnight, so give it some time.
To improve your credit score quickly by paying off all your debts, a loan against property for debt consolidation is your best bet.
Before you apply for it, you must ensure you meet the minimum CIBIL Score required for Loan Against Property and their eligibility criteria set by your chosen lender.Here you will get a customized deal, so you can apply instantly and hassle-free!
Category: Credit Score
