A credit score is very important when it comes to applying for a personal loan. A lot of banks use credit score as a deciding factor for unsecured loan approval. A minimum threshold of credit score is required for a personal loan to get approved.
A higher credit score means a lower interest rate on a personal loan and it can be very useful in the longer run.
Here are some ways to maintain a great credit score. Some of them are more important than others but following all the guidelines will assure you a perfect credit score.
Treat all the debts equally when it comes to paying them off on time.
Older credit cards mean longer credit history which is a good thing for a good credit score hence keep old credit cards open for longer.
Consolidate small credit card debts to make them manageable.
Every bill should be paid on time without any delays.
Try to make manageable purchases on your credit cards which you can pay off on time.
Try not to have a very expensive balance on your credit card.
Give attention to your credit card statements and make sure to reduce any errors
Avoid applying for new credit cards unnecessarily.
Make full payments wherever possible and at least pay the bare minimum if it’s too difficult for you to pay in full amounts.
Contact your bank if you encounter any problems with your credit cards.
Try not to exceed your credit card limit.
To reduce your overall debt load try to reduce one debt at a time
Make all the expensive purchases in a limited time frame set by you for yourself
Consider using a financial or credit card advisor if you find the debt too overwhelming
There some credit boosting services online that are authentic try finding them and use them to boost your credit score.
Try to understand what matters the most for your credit score to be called a good credit score. There are different things such as the length of the credit history, level of debt, timely payments, etc. some of them don’t matter and some of them matter more than the others.
Remember that making timely payments is a key ingredient to maintaining a good credit score. If you don’t want to think about your credit score too badly then this is the only thing that matters for you.
The credit card balance needs to be lower than your credit card limit. 30% of the credit card balance is generally advised. For your score to stay healthy this is an important thing. Banks also maintain the statements of credit card balances along with payment history. Hence this also a thing which needs to be taken into consideration.
Older credit cards are very important for banks that care more about longer histories. Longer history means that you a trustworthy candidate to pay back the debt taken. Hence it is also an important thing to consider which doesn’t take much effort for you to do.
Other loans that you might have also influence your credit score remotely. Hence along with paying back your credit card debts promptly you also need to pay other loans EMIs on time.
When taking a new credit card keep in mind not to have too high a limit on it. As credit cards with very high limits often turn into a headache for yourself.
Credit card reports need to be read to study it. Pay close attention to everything written over there and understand how different things influence your credit score differently.
A credit score ranges from 300 to 800. Lenders generally provide loans to people with a minimum credit score of 670. Hence at least remember that you maintain this bare minimum score.
With a perfect credit score, personal loan interest rates can go as low as 7.35% which will surely make your decision of taking a loan worth the while. Taking a loan can be a great decision if you are not using up all your savings investing other savings in high-interest bank accounts or investing then elsewhere which will lead you more money. Only paying timely EMIs and not making huge purchases can be a good financial strategy for some people. Although remember every individual is different and take calculated decisions according to your personal finances.
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