Are you new to the financial world? Do terms like credit score confuse you? Well, you don’t have to worry because we are here to guide you through the treacherous roads of the financial world. Before we dive deep into what a quick loan is, let us first understand what exactly is a credit score.
What is a credit score?
A credit score is calculated by considering factors such as payment history, credit exposure, credit mix, inquiries, and the length of credit history. A credit score can be a tool if used efficiently. If it isn’t used correctly, it can be a liability.
A credit score is often confused with a CIBIL score. A person’s CIBIL score is calculated by the Credit Information Bureau (India) Limited, the most well-known of the 4 credit information companies licensed by the RBI. For this guide, we will consider your credit score as your CIBIL score.
Now that we have a better understanding of what a credit score is, let’s look at what it takes to maintain a good credit score:
1) Avoid Late Payment: Your payment history plays a vital and crucial role in your credit score. Any form of payment, be it an EMI, credit card bill, or any other bill, needs to be paid on time. If you find it difficult to pay your bills on time, you should always set aside 1 hour a month where you will pay all of your bills; you can always pay your bills before the due date. You can also set your fixed bills to autopay. Many UPI apps now allow you to pay your recurring bills automatically.
2) Check your CIBIL report regularly: You must regularly review your CIBIL report since it might have incorrect information. If there are any inconsistencies in your CIBIL report, you can notify the concerned authorities, who will resolve the issue. Doing this will improve your credit score. You can review your credit score on any quick loan app.
3) Maintain your Credit Utilization: Your credit utilization has to be below 30% of the total available credit limit. You can do this by balancing your expenditures between multiple credit products. Maintaining a low credit utilization ratio will aid you in building and maintaining a good credit score, which will be beneficial to you and make you more financially stable. It will also make you eligible for a fast loan online.
4) Build a mix of credit products: Having a mix of good credit products will help you maintain a good credit score. When a lender is deciding which cash loan or interest to offer you, it helps when they see a steady record on a mix of credit types. A mixed credit product shows that you can manage the responsibilities that come with having various amounts of credit.
5) Avoid frequent credit inquiries: Applying for many credit opportunities can significantly affect your credit score. Sending multiple loan applications can be viewed negatively. This will reduce the chances of you getting an approval for the loan that you have applied for on a salary loan app. Only apply for credits when the need arises.
Managing your credit score is important for financial stability. By avoiding late payments, maintaining a low credit utilization ratio, and monitoring your CIBIL report, you can ensure a healthy credit score. Remember, a good credit score gives you better financial opportunities and shows your reliability as a borrower.