Learn About Personal Finance From Experts
Most of us need credit at some point. Learning about the benefits and considerations of borrowing are important part of a financially successful life. We help you understand implications of credit score, need to be disciplined, ways to improve credit score and to develop a plan towards financial independence.
What is a credit score?A credit score is a number assigned to you based on a study of your credit history which includes your loan history and their payment patterns, credit card usage and payment history, bank accounts held and closed, credit inquiries made by you etc.
What impacts your credit score and how?
In order to maintain your financial health, you should be mindful about your credit health.Here are a few things which positively affect your credit score
- On time loan EMI payments in case of loans.
- On time credit card bill payment and in full rather than paying minimum due.
- Longer and stable credit history.
- Proper utilization of approved credit limit A good mix of credit : if you are taking only one type of credit consistently rather than a mix of different types of loans viz. secured and unsecured, and personal loans, credit card usage, car loans etc.
- Maintaining strong finances (example : a healthy income to debt ratio).
- Regularly checking your credit reports are correct and error-free and ensuring financial institutions that you deal with submit your data to credit bureaus.
- Irregular or late loan repayments.
- Defaulting, being late or regularly paying part of credit card bills.
- Cheque bounces.
- High utilization of approved credit limit or overshooting the limit.
- Multiple credit report inquiries by banks and other institutions.
- Multiple unsecured personal loans applications and/or rejections.
- Defaulting as a guarantor.
- Errors in records by banks and finance institutions.