Financial institutions endow the data to the credit bureaus on a periodical basis to compute the CRIF credit score, CIBIL credit score, Experian credit score and Equifax credit score that shows your credibility for getting a credit like credit cards or loans. A credit score equaling 750 and above is usually looked upon as a strong score for getting approval on a credit application. A high score shows your responsible and disciplined credit behaviour. Continue reading to understand the benefits linked with a high credit score.
What are the advantages of opting for a high credit score?
While your score is not the only factor that a lender factors in while assessing your credit card or loan application, the listed below are a few important key advantages commonly linked with a strong credit score –
Higher approval chances –
A high credit score shows responsible and disciplined credit behaviour, a clean record of repayment behaviour and a lower default risk for lenders, which usually enhances your chances of getting approval on the credit card or loan.
Lower rate of interest –
If you hold a high score, lenders will offer you a comparatively lower interest rate for getting credit such as a home loan, personal loan, or credit card.
Enhanced access to preapproved credit option –
A high score might even often enhance your chances of getting access to pre-approved credit cards and loan deals when you check credit score online. Such deals can endow you with faster access to credit because they generally include minimal documentation as well as shorter approval times.
Simpler access to premium credit cards –
Before approving the application for a credit card, one of the initial things that a bank loan provider considers is your score. As an outcome, credit card issuers are highly inclined to offer such applicants quick and simpler access to premium cards that come with better reward points, cash-back offers and other privileged deals.
Approval for a higher credit card limit and loan proceeds –
A high credit score even can enhance your chances of getting approval for a higher limit on credit cards and loans. This is because holding a higher credit score generally shows a lower default risk owing to your disciplined credit behaviour.
Possibility of loan approval for a higher repayment tenure –
A higher repayment tenure generally includes a higher risk degree for the lenders. However, holding a strong score might assist you to get a higher repayment tenure on a loan than the ones with a lower credit score. When a loan gets repaid over a higher time period, it leads to smaller EMIs, reduced monthly credit burden, and might assist you to manage well your monthly expenditures better.
What are the best ways to ameliorate your credit score?
Your credit score is nothing but a numerical representation of your score report. There are various parameters that affect your score involving your mix of credit, repayment history, age of credit history, credit utilisation ratio, etc. Listed here are some of the important ways that can assist you to ameliorate your score –
Maintain a clean repayment record –
Make a payment of your loan EMIs and credit card dues on time and in full. Missed payments and late payments can adversely impact your credit score. Making sure timely repayment of the debts over a higher time period positively affects your credit profile and score as it shows your disciplined credit behaviour.
Maintain a lower credit utilisation ratio (CUR) –
CUR refers to the credit ratio used to the overall available credit card limit. It shows the extent of your credit dependence. Maintaining a low CUR (credit utilisation ratio) equaling 30 per cent shows your reduced dependence on credit and your lower repayment burden and thus higher credibility. This in turn has a positive impact on your score and enhances your chances of availing an additional credit.
Periodically review your credit report for any errors –
Regularly checking your credit report for any kind of administrative mistakes or errors is important. If you detect any such errors or mistakes, you must instantly report them and get them rectified timely using the dispute resolution process. This might assist you to enhance your score.
Avoid multiple loan applications and inquiries –
You must avoid making any multiple credit inquiries and submitting applications with various lenders in a short time span. It is because this shows you as a credit-hungry individual and even enhances the number of direct inquiries on your report, which negatively impacts your score.
Enhance your credit card limit –
Requesting your credit card issuers or providers to enhance your credit card limit on your credit card might have a very positive impact on your score. A higher credit card limit can assist you to lower the credit utilisation ratio or CUR as the available limit enhances as long as the utilisation stays the same level. Ensure to contact the issuer and check for the credit card limit enhancement offer available on phone banking or net banking.
Avoid settling with your outstanding dues –
You must always try to pay your debt in totality and go for the settlement just if this is the ultimate resort. While settling your dues might lower the debt burden, it shows an inability at your end to repay the debts and might thus negatively affect your score as well as your chances of approval of your credit in the future.
Ending note –
You must ensure to maintain and build a strong credit profile and score over the time period. For this, all you must do is remain focused on maintaining a strong credit behaviour in order to remain eligible for credit whenever you witness times of crunch or require funding to meet any of your financial goals like travelling abroad, buying a home, car, consumer durable goods, get your home renovated, meet monetary mismatches in the case of your marriage, etc. Holding a good credit score of 750 and above also allows you to become eligible for pre-approved loan deals, approval of regular loans at a lower interest rate and processing charges, etc.
