A credit score is one of the most important things in the world besides air, water, and food. Without it, you can’t get a loan or a credit card. And if you do get a loan or a credit card, you’ll be paying a lot more than you should be.
Credit scores are the most important numbers you can have. They affect your financial life in profound ways, but many don’t know much about them. So, what is a credit score and how do you improve your credit score? Here’s everything you need to know about credit scores, including how to improve them.
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What Is A Credit Score?
A credit score is a number that measures your creditworthiness. It tells lenders how likely you are to repay a debt. Your credit score is determined by a number of factors, including the payments you’ve made, the amounts you owe, and the length of time you’ve had a credit card or loan. The higher your credit score, the better your chances of being approved for a loan or a credit card, and the lower your interest rate will be.
Your credit score is used by lenders and other organizations when deciding whether to loan you money or whether to give you a credit card. They use factors like how much money you make and how much debt you have to calculate your credit score.
There are 4 main credit bureaus in India – CIBIL™, Equifax, Experian, CRIF Highmark. Each bureau has its own formula to calculate your credit score. They collect credit data about an individual from banks and NBFCs that lend money in the form of loans and credit cards. This information is analyzed and used to calculate your credit score.
Credit score in India ranges between 300 and 900; where 700 and above is considered good, and anything below 650 is considered bad.
Why Is My Credit Score Important?
This score matters because it’s the industry standard for measuring a person’s creditworthiness. The higher your score, the lower the interest rate you’ll pay for your car loans, credit cards, mortgages, and another consumer financing.
Your credit score is important, because it is what lenders use to analyze your creditworthiness before giving you a loan. It is used by lenders and other credit institutions to determine your interest rate and manage risk.
Lowering your interest rate and/or getting a better interest rate are the two most important benefits of having a high credit score.
Another benefit of having a high credit score is getting higher credit limits and higher loan amounts. When a lender sees that you have a high credit score, they’re more likely to approve you for loans and credit cards. This means that you have more opportunities to build your credit and improve your score. You’ll also be able to borrow money when you need it most.
Where And How Can You Get Your Free Credit Score?
Checking your credit score on a regular basis allows you to make sound financial decisions. You can approach a bank and negotiate better terms for a loan or credit card based on your score. Even a small reduction in the interest rate on large-ticket loans can save you a significant amount of money over time. You might be wondering how and where you can obtain a free credit score check.
The following are various platforms where you can check your credit score.
Credit Bureaus: According to the RBI, each credit bureau must provide your credit report and score for free once a year. You can check it out online at their official website or by sending them an email.
Banks & NBFC Portals: Throughout the year, third-party financial sites offer free credit scores. You can access it at any time and from any location, and it is completely free. Checking your credit score does not harm it, and you can do so as many times as you want.
Credit Management Services: Services like CreditMantri offer free credit score along with a detailed analysis of your credit report. This helps you identify areas of improvement and get a better understanding of your credit worthiness. You can then take steps to improve your credit score.
You might be required to enter information about your name, date of birth, PAN, employment, etc. in order to check your credit score online for free. After providing the information, the credit bureau will retrieve your credit score and report for your review. Your credit score can be checked on CreditMantri for free in as little as 2 minutes.
What Are The Factors That Determine My Credit Score In India?
The factors that determine your credit score in India are your credit history, current credit usage, and the type of credit you have. Your credit history includes your past credit card and loan usage; which lenders use to calculate your credit score.
Your credit score is primarily a result of the amount of debt you have, the amount of credit you have, and the length of time that you’ve had credit. However, your credit score is also impacted by the amount of income you make and the length of time that you’ve had that income. The higher your income, the better your credit score.
How Can I Improve My Credit Score To Get The Best Loans And Credit Cards In India?
You can improve your credit score by being on good terms with your creditors, and paying your bills on time. This will help reduce the number of times that you have to pay late, and will help you get a better interest rate on your credit card.
Another measure is to limit your credit utilization ratio. The credit utilization ratio is the amount of credit that you use compared to the amount of credit that you have available. The best way to limit your credit utilization ratio is to pay your credit card bills in full every month.
Also, do not apply for too many credits in a short period of time. It can look like you are applying for too many cards, which can decrease your credit score. Instead, apply for fewer cards, but ones that will provide you with a larger amount of credit, which in turn will increase your credit score.
Check your credit score regularly –
Make it a habit to check your credit score at least once every 6 months. There are many websites that provide credit score information. Try to get multiple perspectives and learn how to improve your score.
The key to getting a high credit score is to know your scores, and understand your strengths and weaknesses. Paying your bills on time, being able to manage your credit utilization ratio and being responsible for your credit can help improve your credit score.