Features And Benefits Of Good Credit Score You Need To Know

A three-digit figure, known as a good credit score, is used to reflect your suitability to get a loan or credit card. Credit scores range from 300 to 900, with 900 being the max score. When you request a property against loan, the bank or NBFC will check your credit score. TransUnion CIBIL, one of the four credit bureaus in India, provides this score. This score is based on a number of factors. Read on to learn more.

When it comes to credit, what factors determine a person’s score?

As TransUnion CIBIL, the chance of getting a loan rises as your credit score gets closer to 900. A good credit score is regarded as 750 or more in most situations.

How to improve your credit score?

Listed below are five strategies that might help you improve your credit score.

Options for Raising Your Credit Score

You may think of your good credit score as a number in your credit report. Your credit score is based on various factors, including your payment history, credit mix, credit utilisation ratio, length of credit history, and more.

Keep a clean track record by making full and on-time EMI payments for all credit cards and loans. Your credit score will take a hit if you make payments late or don’t make them at all. Repaying a loan on time over a long time shows lenders that you can be trusted with your money, which improves your credit score.

Keep your ratio of borrowed funds to available funds low.

The “utilisation rate” of a credit limit refers to the amount of that credit limit that has been used. The fact that you rely so much on credit indicates financial issues. Keeping your credit utilisation at or below 30 per cent will help with a good credit score. It suggests that you are less reliant on credit, have a lower burden for your EMIs, and are more reliable.

Conduct routine checks of your credit report

Any issues that arise need to be brought to the notice of CIBIL. They will resolve them by using the most suitable option for resolving the issue. Hence, the rating assigned to your credit profile may improve.

Don’t Contact Many Lenders at Once

If you’re looking for any loan such as a property against loan, only contact one lender. If you contact many lenders together, it makes you look like a credit-hungry person. This increases the number of hard queries on your credit report, both of which harm your credit score.

Increase in Credit Limit

If you want to have a good credit score, ask your credit card company for a higher credit limit. If you keep spending the same, having a higher credit limit will help you have a lower credit utilisation ratio. Inquire about a credit line increase by calling the provider.

You should only consolidate debt if necessary. Always try to settle your bills fully before applying for a loan. Paying off your debts can lower your overall debt, and make you eligible for more loans if you need them.

Why is it beneficial to have a high credit rating?

Paying off debts, such as property against loan and credit cards, on time is one of the best ways to raise your credit score. Here is a list of some of the benefits that you can get as a direct result of having a good credit score –

All borrowing rates are quite low.

Having a good credit score has this major benefit. Everyone desires to have a great credit score to access low-interest options. The burden of debt can be reduced and paid off much more quickly as a result. In the long run, savings can be achieved by reducing major debts.

Opportunities to obtain financing and credit cards are enhanced.

Each lender checks your credit history and score when you apply for a property against loan or credit card. This is a “hard inquiry,” which might lower your credit score. Rejection of your application may harm your credit rating. However, if your credit score is high, creditors have less of a reason to reject your credit application. Thus, increasing the chances that you will be approved.

Credit Limit Increases

When applying for a credit card or loan, your income and good credit score are the two most important factors. So, you may get a bigger loan or a greater credit card limit. By examining your credit history and income stability, lenders can decide to determine if you are a reliable borrower. You could still be able to get a loan or a credit card even if you have a low credit score, but the terms will not be favourable.

Influence in negotiations is increased

Property against loan approval with higher interest rates is more likely for those with lower credit scores. These loans may have extremely tough repayment terms. Your ability to negotiate a better deal on the interest rate will be weakened. However, you will have a greater chance of having loans and credit cards approved if your credit is in excellent standing. You will also be able to compare loan offers and bargain for lower interest rates from lenders.

Conclusion 

With time, your credit score may increase or remain the same. An established track record of responsible monetary behaviour is the only requirement to qualify for credit. If you do this, you will be able to build your credit history and reap the benefits of being a responsible borrower, such as lower interest rates, more favourable loan terms, and other benefits. Learn more about a good credit score through blogs and articles on Piramal Finance.