Credit Score: How to Increase Credit Score, Learn the Exact Process...

In Brief

Credit score is an important step for obtaining a loan.

If the credit score is low, loans are not granted.

Learn the main reasons for a low credit score...

Credit score is an important factor that affects the process of obtaining a loan or a credit card. If your credit score is low, you may face difficulties in getting a loan or a credit card. From the perspective of a financial institution, the credit score is a crucial criterion in the decision-making process for lending. Banks and other lending institutions need to make decisions about your loan eligibility based on your credit score information. Therefore, it is important to maintain a good credit score.

Reasons for Credit Score Decrease

There can be many reasons for a decrease in credit score. The main reason is not making timely payments on loan installments or credit card bills. If you have ever not paid your installments or credit card bill on time, it negatively affects your credit score. Even missing a single installment can lower your score.

Closing a credit card is also seen by some as a way to increase their score. However, this will reduce your credit limit, and this can also be negative in terms of the score. Spending more than 50% of your credit card limit indicates reliance on your debt or credit card. To maintain a good credit score, it is best to use 30% of the credit card limit.

Ways to Improve Credit Score

1. Make Payments on Time: Try to pay all your installments and credit card bills on time. Timely payments improve your credit score.

2. Use Credit Card Appropriately: Do not exceed the limit when using a credit card. For example, if your credit limit is 3 lakh rupees, it is better to use 1 lakh rupees or less.

3. Be Careful When Applying for New Loans: Applying for too many loans or credit cards can lower your credit score. Apply only when necessary.

4. Check Credit Score: Check your credit score from time to time and take necessary steps to improve it.

Borrower's Credit Report

Credit score is an important tool for your financial status, and it affects your ability to borrow. If your credit score is very low, it can be difficult to obtain a loan. Therefore, conduct financial transactions in a disciplined manner and make all payments on time. Additionally, improving your credit score is a long-term process. So, regularly review your credit card and loan payments, and ensure that you are making the right financial decisions.