Credit score: It is well known that the credit score plays the most important role in obtaining loans. Those with bad credit have a hard time getting a loan. But there are still some points related to credit scores that are not as widely known. For example, on what basis are credit scores calculated or what is the rate of credit utilization. Today we are going to tell you about similar things related to credit scores.
- First, be aware that the credit score ranges from 300 to 900.
- Usually having more than 750 credit scores is considered good.
- Those who have a higher credit score can easily qualify for loans.
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Credit bureaus keep all records
- The credit score of customers is decided by many credit bureaus.
- Major credit bureaus include Trans Union Cibil Experian, CRIF High Mark, and Equifax.
- These credit bureaus keep a record of your monthly bill payments and loan installments.
- They calculate your credit score based on a few years of registration.
- The credit utilization rate (CUR) is the amount of your credit card’s credit limit that you use in a month.
- The CUR has a great impact on the credit score. Your CUR depends on how much you use your credit card.
- The more you use your credit card, the higher your CUR will be.
Have an old credit card considered advantageous
- Having a long term loan or using a credit card for many years is considered good in terms of credit score.
- In fact, it shows that you are making good use of the loan. You pay down payments on time.
Do not apply repeatedly
- Don’t repeatedly apply for a loan or credit card. It is not considered good in terms of credit score. This lowers credit scores.
Pay off the loan at the right time
- You have to pay the EMI of the loan regularly and not miss it.
- Once you’ve made a late or defaulted payment, it can reduce your credit score by up to 100 points.