A credit score is one of the most essential prerequisites for getting a loan. The score speaks about one's credit behaviour and financial activities in a detailed manner. Based on this score, a loan provider decides whether to approve a loan application or deny it. A good credit score means the borrower has made timely payments, a good debt repayment track, and various other credit eligibility criteria. A score of 750 and more makes you eligible for instant approval as well as an affordable loan. The first thing that a loan provider checks are the credit score. A credit score decides your borrowing experience. It is important to take note of easy and smooth borrowing. When you take a personal loan or any other loan, you need a good ‘my credit score’. Hence, understand the ways to get a good credit score so that you get affordable and instant approval.
● Pay your bills on time: Is there an option to delay or miss the payments? Definitely not. It is important that you make your credit card bills or EMI payment on time. This is why it is important to decide your EMI right so that during repayment it becomes easy for you to pay. Credit card bills need to be paid within the due date of every month. You cannot miss the date. Automate your payment option so that your bills are debited without you having to worry. Automate payment to have a good payment track record. Learn How to calculate business loan by using business loan calculator.
● Do not keep outstanding: Pay the complete bill that is generated. You need to pay the full bill amount and not any minimum amount. When you pay the minimum amount you end up having an outstanding or overdue on your loan and this will affect your credit score. It is important to improve your credit score by paying the entire bill amount.
● Do not close accounts: Credit accounts with a long history are important. You need to keep your credit account open even when you do not use it. Longer the credit age the better it is for you to get a good credit score. New credit is of no use when you improve your credit score. You need to keep your existing credit account open if you want a good credit score.
● Too many loan applications: When you keep applying for too many loans, there are hard enquiries run on your credit report which reduces the credit score. Every loan provider that you apply for a loan runs a hard enquiry. This will reduce the credit score significantly. Do not keep applying for multiple loans as that will damage your credit score.
● Debt to income ratio: It is important to maintain a balanced debt to income ratio. The debt to income ratio means the amount that you use from your income to pay your debt. The ideal debt to income ratio should be below 30%. If you have existing loans do not go for new ones.
● Credit mix: Make sure you maintain the right credit mix. Credit mix means how well you have managed your debt profiles. Have a good mix of both secured and unsecured loans. Do not keep applying for one kind of loan. You need to always balance it.
Wrapping up
How to check credit score? It is important to visit my credit score section and click on my credit score. A credit score is important for you to get the right borrowing experience so that you get an affordable loan.
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