Mastering Credit Management: Tips to Maintain a Healthy Score
The credit score is a three-digit number that lending institutions consider while approving loan applications. It plays a crucial role in assessing the creditworthiness of the borrowers. Hence it is a significant factor that impacts the loan approval process. Potential borrowers can read further to learn how individuals can maintain credit scores to reflect enhanced creditworthiness.
What are the ways to maintain a good credit score?
Borrowers must consider the following points as given below to maintain a credit score:
Make timely payments
Repaying all debts on time is crucial to build a record of good credit management. This increases the chances of loan approval at desirable terms. Borrowers should also pay their EMIs within the stipulated time or make prepayments, if possible.
Avoid taking multiple loans together
One should opt for a new home loan only after successfully repaying the previous ones. Avoiding multiple loans at the same time will help them make repayments on time. It is also beneficial in maintaining their credit health while increasing the chances of loan approval.
Opt for a credit mix
A credit history with a mix of loans, that is, secured loans like home loans and unsecured loans like personal loans or loans of short and long tenor helps in maintaining a healthy credit report. A diversified credit portfolio shows an individual’s ability to repay different kinds of loans successfully.
Discrepancies in the credit report
Borrowers must ensure to resolve any discrepancies in their credit reports as early as possible. Errors in the report may occur due to various factors like miscommunication, accounting errors, etc. A healthy and error-free credit report is beneficial in maintaining a good credit score.
What is a good credit score?
There are several credit bureaus that generate the credit reports of borrowers. These scores are considered to depict their loan repayment capabilities, based on which they can get loan applications approved by their lenders.
So, credit scores reflect the health of a borrower’s credit history according to which lenders assess the risks associated with lending them loans, such as home loans, etc. This way, opting for loans becomes easier when you have a good credit score.
Borrowers who are opting for loans must know the range of credit scores that determine the loan eligibility and accordingly proceed with how to increase credit scores quickly. The following are the CIBIL score ranges, given as what is considered good to poor credit health.
- 300 to 549: Poor
- 550 to 649: Fair
- 650 to 749: Good
- 750 to 900: Excellent
How to check a CIBIL score online?
Borrowers can have access to their credit report online and check their CIBIL score calculation in the following steps:
Step 1: Visit the official website of CIBIL.
Step 2: Click on ‘Get your CIBIL score’.
Step 3: Enter the required details such as name, Aadhaar number, email ID, etc.
Step 4: Select ‘Accept and continue’.
Step 5: Individuals will receive an OTP. Put in the OTP and click ‘Continue’.
Step 6: Click on the ‘Go to the dashboard’ option.
Step 7: Individuals can click the ‘Member Login’ option to check their CIBIL score.
There are several lending institutions that offer pre-approved loans to their existing customers. These offers apply to home loans, loans against property, etc. Borrowers can check their eligibility for such offers on the official website of their lending institution by entering their names and other essential details as required.
When borrowers are aware of the practices that would help to maintain a good credit score, they can take precautions to ensure the same. Individuals should be cautious about their debts and repay them on time to increase the chances of loan approval, boosting their credit score simultaneously.
