To improve creditworthiness, experts say that paying off loans on time is a great way to start.
Loans have become an integral part of our lives, especially since the pandemic began. Various banks, NBFCs, and fintech companies have all started making loans to people in need, but some people still face problems obtaining loans due to low credit scores or no credit scores. It should be noted that credit score is something that Indians often ignore. Whether it’s a home loan, a student loan, or any other loan – a borrower’s credit score will likely be checked everywhere.
According to industry reports, nearly 6 in 10 millennials are turned away when they apply for credit cards, mortgages, auto loans, and other financial products. In fact, millennials ages 23 to 38 experience higher denial rates than other generations.
Vineet Patawari, Co-Founder, CEO of Financial Market Learning Portal Elearnmarkets.com and Stock Market Analysis Platform StockEdge, says: “This pandemic is a testament to the importance of financial independence in our lives. The future is uncertain and certainly requires sound financial planning. Having a good credit score is necessary to easily approve a loan.
So what is the credit score?
This instrument was first introduced by the Fair Isaac Corporation, but has now gained popularity around the world. Simply put, a credit score is a numerical figure obtained from a person’s credit files to represent how valuable they are to any type of credit instrument.
Patawari says, “A credit score generally ranges from 300 to 850, depending on factors such as total debt levels, number of open accounts, payment history, and so on. Any score over 650 is considered good and the person may be eligible for a low-interest rate. “
Having a good credit score goes a long way. Experts say that a good credit score is a gateway to a quiet financial life. That is why many people actively seek information to manage their creditworthiness. To improve creditworthiness, experts say that paying off loans on time is a great way to start.
How can you improve your credit score?
Be on time when paying bills. Experts say that one should not delay paying the invoice until the last due date, try to settle it in advance. Check with your credit card company regularly about a possible credit increase. A good credit standing increases your credit limit. Avoid closing credit card accounts. Patawari says: “Stop using the account, but never close your account. It will significantly affect your credit score. ” Work with credit repair companies. They perform a variety of activities such as negotiating with your creditors and offering consulting.
Experts say that financial independence is not a sprint race. It is a marathon. With sound planning and a smart investment, anyone can be financially independent.
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