credit score

What is a Credit Score? And what damages your Credit Score?

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Credit Score: There are many numbers that are important in life, from your age to your pin number to your ban balance – but one that is often overlooked until it’s too late is your credit score. We all know we have one, but ending up with bad credit is an all too easy mistake to make which can hugely impact our lives and ability to secure loans and mortgages, as well as credit cards. Luckily however, there are plenty of things you can do to repair your credit score – even when it looks like it’s gone past the point of no return.

What is a credit score?

In basic terms, your credit core is a number which tells a lender or bank how reliable you are with repayments. Having good credit (which is shown through a high credit score) shows a lender that you are reliable and able to pay your debts on time and in full. Having a low credit score tells them that you have a history of late or incomplete debt payments, and this makes them less likely to agree to offer you a loan or mortgage; if they do offer you a loan then it is likely to have very high interest rates. Essentially your credit score tells them how big a risk you are to them if they lend you money.

What damages your credit score?

There are many ways to damage your credit score, and sadly it’s much easier than you might hope. Essentially, a credit score is reduced when you gather debts you are unable to pay off, but there are many different ways that this can happen. The most frequent problems are borrowing more than you can afford to pay off, missing more than one instalment of a regular payment, or living very close to your credit limit – i.e. living off of credit cards, or living at the bottom of your overdraft. Both signify poor money management or financial hardship, which are red flags to lenders looking for assurance that they will be repaid. 

You can also damage your credit score by making other mistakes such as frequently opening new bank accounts and repeatedly applying for credit, as each failed application negatively impacts your credit score.

The other tricky thing that can negatively impact your credit score is having no credit history. This can seem unfair, as you may think it would be a good thing to have never lived off a credit card or accrued any debt you must pay off – but in fact, this just means that there is no proof you are able to pay debts reliably and this can negatively impact your number.

Why is good credit important?

Having a good credit score is very important for many reasons. It allows you to be approved for loans including mortgages and business loans, and additionally if you are a renter many landlords look for a good credit score in order to lease their properties to reliable tenants. In addition, you will be able to get access to the best credit cards and interest rates if you have a good credit score.

Improving your credit score

So, if your credit score is looking a little less than healthy, what can you do to reverse the trend, repair your credit, and get things back on track? We’ve put together five tips for you to do just that.

Get a credit card 

This may seem counter intuitive, but as mentioned above one of the ways you can damage your credit core is by having no credit history to speak of. You can remedy this by getting a credit card and using it to make small purchases you can easily pay off, meaning you show you can consistently and reliably pay off debt. That said, make sure you know you are eligible before applying for a card as multiple applications can have a negative impact.

Pay off your overdraft

If you are regularly overdrawn or living out of your overdraft, make every effort you can to break this cycle. Go over your budget and ensure you’re using your money wisely; there’s no need to make yourself miserable but cutting back on unnecessary expenditures in order to improve your credit score will be well worth it.Lower your credit utilisation

Lower your credit utilisation

If you are regularly overdrawn or living out of your overdraft, make every effort you can to break this cycle. Go over your budget and ensure you’re using your money wisely; there’s no need to make yourself miserable but cutting back on unnecessary expenditures in order to improve your credit score will be well worth it.Lower your credit utilisation

Although having a credit card is a good thing for your credit score as long as you pay it off consistently, having your credit card hovering close to its credit limit is not a good idea. Make sure to keep any spending below 25% of the credit limit on a given card, as living close to the limit is a red flag for financial hardship for lenders.

Fix errors in your credit report

Access the information on your credit usage over the past 5-10 years and thoroughly check it. Although not frequent, errors are not uncommon and if you can find any to be fixed then this will help you to improve your credit score.

Pay any outstanding debts down

You don’t have to be able to pay your debts off completely in order to improve your credit score – you just have to show that you are able to make consistent contributions towards paying off those debts. You should start by focusing on high interest debts which are growing more quickly, and in this way prevent your debts from getting out of hand at the same time as improving your credit score.

So there we have it. Having a good credit score is very important; whether you’re starting tot hink bout buying your first house in a few years time or you simply want to find a nice place to rent with a good landlord, having a great credit score is a step on that road. It’s very easy to damage your credit score, from overapplying to credit cards and opening lots of accounts to missing payments on bills – but luckily with a bit of intelligent planning and dedication you will be able to improve your credit score and get things back on track.

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Seven things to avoid to save your CIBIL Score

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CIBIL Score: CREDIT SCORE determines your credit goodness and helps a loaner to decide if you qualify for a loan or a MasterCard. As per CIBIL, credit score ranges from three hundred to 900, and people with a score of a minimum of 750 points, get quicker loan approvals.

A credit score features a direct impact on your monetary life. A higher credit score suggests a lower risk of default and the other way around. Below square measure seven factors that will impact your credit score:

1. Do not miss the due dates: Missing the date of your MasterCard bill, not paying equated monthly instalments (EMIs) on time, features a negative impact on your credit history. even though you have got incomprehensible one payment or EMI, it’ll be mirrored within the report.

If your credit score is low as a result of you do not pay your bills on time, be prompt together with your payments. Once you create a habit, it’ll take a minimum of half a dozen to eight months for your credit history to enhance.

However, the smart factory is that currently, besides loans or EMIs solely MasterCard bills square measure thought-about whereas evaluating credit history and different house bills aren’t taken into thought.

2. Maintain a healthy credit use quantitative relation Credit use quantitative relations are often outlined as what proportion credit is availed from the given credit limit. it’s calculated in share terms.

3. do not increase your MasterCard limit of Although Associate in Nursing increased limit on your MasterCard offers you the flexibleness of availing additional debt, this will affect your credit score if not used judiciously.

4. confirm all of your recent loans square measure ‘closed’ and not ‘settled’. Any default recent loans are mirrored within the credit history. A default lowers your credit score and credit goodness.

5. you need to check your credit report of throughout the year to make sure that it doesn’t have any errors which will affect your credit score.

6. scan your credit report initial before applying for a loan. As mentioned on top of, a credit score determines the credit risk. So, if you have got an occasional credit score, a bank may charge you a higher rate for the loan or perhaps reject your application.

7. Not having a credit history :This may return as a surprise to several folks however not having a credit history features a negative impact on your credit score. Your credit score is decided on the premise of your loan reimbursement history, credit behavior, credit use limit alongside different factors.

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Reasons Having a Good Credit Score Is Important

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Credit Score: A credit score tells much more than the loans you need to get or the interest rates you pay. Credit scores are the financial tools. The credit score is the most significant measure of your financial health. If your credit score Is good, it will be very easy for you to get approved for loans or credit lines. Credit scores open the way of the lowest available interest.   

There are multiple reasons for having a good credit score. Credit scores offer you to buy things with borrowed money that is paid back over time. It helps you manage big expenses easily, you can also manage daily expenses with the use of a credit card.

If you are looking to qualify for big loans, the lender looks into various factors, including checking your gross income and debt-to-income ratio. Your employment history is also verified.

Lenders also depend upon the automated evaluation process that includes checking your credit card score and credit history to determine how likely you are to pay your debts on time.

Credit Score

A credit score is a three-digit number that is premeditated by applying a mathematical algorithm, and three credit reports are created, which are updated based on credit accounts.

Higher the credit score, higher will be your chances to qualify for loans with more favorable terms like low-interest rates and potentially low fees. A credit score determines your eligibility for a mortgage.

Building and maintaining strong credit goes into your favor while applying for a mortgage. When the lender looks at the history, he gets to know that you have paid all the loans as agreed and have used credit wisely, and he gets confident when qualifying you for a mortgage.

Credit score has become a very significant part of our financial lives, and keep track of your financial situation. Many companies provide credit card solutions to their clients who are facing low credit score issues or have a poor credit history.

A low credit scores

A low credit score can have repercussions. If you are used to paying bills after the due date or submit fees late, it will affect the score of the credit score. A low credit score makes it very difficult for you to get loans in the future. It makes it hard even to land a certain job.

  • Poor credit score makes it difficult to get loans or to qualify for credit accounts.
  • If you get the loan, the interest rate will be very high
  • You will find it difficult to get a job as an employee to run a credit check before offering you a job, especially if the person is applying for a management position, as it involves handling money.

On the other hand, balancing a good credit score helps you save money and helps you in financial aspects. Establishing a credit score is very important and has many advantages.

Significant Saving on Interest Rates

Interest rate is the amount charged by the lender for borrowing the money. If you are borrowing some amount from the company, you will have to pay interest on the borrowed amount. 

A good credit score helps you to be eligible for the best interest rate. With a low credit score, there is a greater chance that you will not qualify for the loan. Even if you avail the loan, you will be charged with a high-interest rate.

With a good credit score, you will not have to pay high charges on credit card loans. The less money you pay in interest, the quicker you pay the debt, and then you can get more money for expenses.

Better Loan Approval

As already mentioned, a decent credit score is very important for getting approval for the mortgage. Poor credit history makes it difficult for you to get loan approval.

Although a good credit score does not guarantee you loan approval, it increases your chance of being approved for credit. So, you can apply for a mortgage with assurance.

More Power to Negotiate Terms

A decent credit score provides you the power to negotiate on a low-interest rate while taking the loan. If you want to bargain on a loan depending upon the credit score, you can get a better offer grounded on your score.

While with a low credit score, you will have extreme difficulty in finding loan options, and if by luck you get the loan, you will have to agree on all the terms and conditions. 

Better Rates on Insurance and More Housing Options

Insurance companies use information about your credit score and credit report to develop your risk score. The people with low credit scores are disapproved, while people with good credit scores are required to pay less for the insurance.

Considering these and many other aspects, many clients look for credit score solutions so that they can have a better credit score and avail all the benefits of loan and mortgage.

A few landlords or rental management firms lookout for potential buyers’ credit scores to see if they are financially trustworthy. A higher credit score creates a sense of trust, and you are more likely to get approved of the house with a better credit score.

Things You Can Do

If you want to approve your credit score, there are many things that you can do on your behalf before consulting any firm or organization

  • Make sure to pay at least the minimum balance
  • Keep your credit use low by paying down the credit card balance
  • Do not apply for too many new credit cards and try not to close old one’s

Review Credit Card Report

If you want to improve your credit score, reviewing a credit card report helps to know what will be working in your favor. You can get a copy of the report and review it to understand what is affecting your score. Check your credit score for the errors and other issues that can drag down the score.

Handle Bill Payments

Payment history affects your credit score greatly; therefore, it is crucial to pay the debts, including old loans. If you are paying bills on time, it will work in your favor. You can simply improve your score by avoiding late payments. Keep track of your monthly bills, setting alerts of the due date so that you do not forget to pay the bills. Automating a bill payment system from a bank account also saves you from many troubles.

There are multiple reasons for having a good credit score. Credit scores offer you to buy things with borrowed money that is paid back over time. It helps you manage big expenses easily, you can also manage daily expenses with the use of a credit card.

If you are looking to qualify for big loans, the lender looks into various factors, including checking your gross income and debt-to-income ratio. Your employment history is also verified.

Lenders also depend upon the automated evaluation process that includes checking your credit card score and credit history to determine how likely you are to pay your debts on time.

Credit Score

A credit score is a three-digit number that is premeditated by applying a mathematical algorithm, and three credit reports are created, which are updated based on credit accounts.

Higher the credit score, higher will be your chances to qualify for loans with more favorable terms like low-interest rates and potentially low fees. A credit score determines your eligibility for a mortgage.

Building and maintaining strong credit goes into your favor while applying for a mortgage. When the lender looks at the history, he gets to know that you have paid all the loans as agreed and have used credit wisely, and he gets confident when qualifying you for a mortgage.

Credit score has become a very significant part of our financial lives, and keep track of your financial situation. Many companies provide credit card solutions to their clients who are facing low credit score issues or have a poor credit history.

A low credit scores

A low credit score can have repercussions. If you are used to paying bills after the due date or submit fees late, it will affect the score of the credit score. A low credit score makes it very difficult for you to get loans in the future. It makes it hard even to land a certain job.

  • Poor credit score makes it difficult to get loans or to qualify for credit accounts.
  • If you get the loan, the interest rate will be very high
  • You will find it difficult to get a job as an employee to run a credit check before offering you a job, especially if the person is applying for a management position, as it involves handling money.

On the other hand, balancing a good credit score helps you save money and helps you in financial aspects. Establishing a credit score is very important and has many advantages.

Significant Saving on Interest Rates

Interest rate is the amount charged by the lender for borrowing the money. If you are borrowing some amount from the company, you will have to pay interest on the borrowed amount. 

A good credit score helps you to be eligible for the best interest rate. With a low credit score, there is a greater chance that you will not qualify for the loan. Even if you avail the loan, you will be charged with a high-interest rate.

With a good credit score, you will not have to pay high charges on credit card loans. The less money you pay in interest, the quicker you pay the debt, and then you can get more money for expenses.

Better Loan Approval

As already mentioned, a decent credit score is very important for getting approval for the mortgage. Poor credit history makes it difficult for you to get loan approval.

Although a good credit score does not guarantee you loan approval, it increases your chance of being approved for credit. So, you can apply for a mortgage with assurance.

More Power to Negotiate Terms

A decent credit score provides you the power to negotiate on a low-interest rate while taking the loan. If you want to bargain on a loan depending upon the credit score, you can get a better offer grounded on your score.

While with a low credit score, you will have extreme difficulty in finding loan options, and if by luck you get the loan, you will have to agree on all the terms and conditions. 

Better Rates on Insurance and More Housing Options

Insurance companies use information about your credit score and credit report to develop your risk score. The people with low credit scores are disapproved, while people with good credit scores are required to pay less for the insurance.

Considering these and many other aspects, many clients look for credit score solutions so that they can have a better credit score and avail all the benefits of loan and mortgage.

A few landlords or rental management firms lookout for potential buyers’ credit scores to see if they are financially trustworthy. A higher credit score creates a sense of trust, and you are more likely to get approved of the house with a better credit score.

Things You Can Do

If you want to approve your credit score, there are many things that you can do on your behalf before consulting any firm or organization

  • Make sure to pay at least the minimum balance
  • Keep your credit use low by paying down the credit card balance
  • Do not apply for too many new credit cards and try not to close old one’s

Review Credit Card Report

If you want to improve your credit score, reviewing a credit card report helps to know what will be working in your favor. You can get a copy of the report and review it to understand what is affecting your score. Check your credit score for the errors and other issues that can drag down the score.

Handle Bill Payments

Payment history affects your credit score greatly; therefore, it is crucial to pay the debts, including old loans. If you are paying bills on time, it will work in your favor. You can simply improve your score by avoiding late payments. Keep track of your monthly bills, setting alerts of the due date so that you do not forget to pay the bills. Automating a bill payment system from a bank account also saves you from many troubles.

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How to Improve Your Credit Score with an Installment Loan

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An installment loan is a broad term used to describe commercial and personal loans extended to borrowers. It can be any loan with scheduled repayment. A credit score is an essential element of your financial life.

A good credit score can provide many benefits like lower interest rates and higher chances of loan approval. If you have a subpar credit score, consider taking an installment loan to improve your credit score. In this article, you will learn the different ways an installment loan can boost your credit score.

How Can an Installment Loan Help Build Credit Score?

The credit score reflects your financial activity. Any loan and its repayment get reported to the credit bureaus. If you don’t have much past financial activity, your credit score is more likely to be lower. Take an installment loan to improve credit score and make timely monthly repayments. Your timely payments will have a positive effect on your credit score, and it will start improving.

How Can an Installment Loan Improve Your Credit Score?

Multiple loan repayments are difficult to manage, especially if your income to debt ratio is high. If you miss on payments, it will get reported to the credit bureaus, and your credit score will fall. If you are finding it tough to manage multiple loan repayments, consider taking an installment loan to improve your credit score.

The loan amount can be utilized to pay multiple loans, including credit card debt. Once all loan repayments are made, you are only left with one installment loan to repay. With only one loan repayment to make, you can prepare a budget to save more and make timely repayments. It may have a positive impact on your score.

Different Ways Installment Loans Boost Your Credit Score

Reduce Credit Utilization Rate

Many people don’t know the credit utilization rate affects their credit score. A high credit utilization rate is not considered reasonable, and it lowers your credit score. If you are using multiple credit cards, make sure the credit utilization rate is 30% or below.

For example, if the credit card limit is $50,000, you should always ensure the credit card limit balance is $35,000 or more. If the credit utilization rate is beyond 30%, it will negatively impact your credit scores. If you have high credit card balances, take an installment loan to pay credit card dues. This will reduce the credit utilization rate, which will have a positive effect on the credit score.

Debt Consolidation

When you reduce the credit utilization rate, your credit score improves. You can use it to your benefit and get loans with lower interest. Take an installment loan to pay all high-interest debts. It improves your debt to income ratio.

Paying off high-interest debt helps you save money in the long run. Installments loans can be used for debt consolidation and make debt repayment a lot easier. When you take installment loans and make timely repayments, monitor your progress. Make sure all the financial activities are reported on your credit report.

The primary purpose of an installment loan is to meet your financial needs, but it can also boost your credit score, bringing in several benefits.

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How does the CIBIL Score Affects Your Credibility?

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Thinking of buying a house or a car? The mere thought of applying for the loan is enough to induce stress as in spite of having all the required documents; there’s always a chance of your loan application getting rejected.

It’s true that we can’t provide any guarantee for your loan application acceptance but we can certainly offer you an insight on one of the fundamental component that defines your credibility- CBIL score.

What is a CIBIL Score?

CIBIL (Credit Bureau India Limited) score is a three digit score that plays a pivotal role in determining your credibility. Derived from CIR (Credit Information Report), your CBIL score is determined by taking your entire credit history in consideration. In simple terms, CIBIL score helps the lender to know whether you are capable enough to repay the loan.

How will the CIBIL score influence my loan application?

As the CIBIL score forms the authentic source to reflect your credibility, whenever a lender receives your loan application he refers to your credit score. A score of less than 300 can increase the chances of loan rejection whereas a score between 300-600 or above 900 can process your application to the next level.

Post your credit score check, a review of your recent credit purchases, payment history, outstanding payments, earlier loan repayment durations, etc., is undertaken. Although sanctioning of loan is subjective in nature, the component of CIBIL score certainly influences the decision of concerned money lending institutions.

How do you manage your CIBIL score?

If your CIBIL score is less than 300, here’s how you can improve your CIBIL score:

  • Avoid overuse of credit: Use your credit facility only when you actually need it, as over exploitation of credit simply creates a false impression on your lender.
  • Clear your dues: Ensure that you act responsibly and clear all your outstanding EMIs and bills on time as the timely clearance of your bill will reflect a healthy loan repaying capacity.
  • Periodic check: Through a periodic review of your CIR (Credit Information Report), you can always rectify your errors in case of any.
  • Manage your accounts: It is advisable to have only one or at the most two accounts, as the presence of multiple accounts often makes it difficult for efficient management.
  • Seek help: If you are finding it difficult to manage your CIBIL score than always seek professional help as that would simplify your credit management.

Having said that always remember that CIBIL score affects your credibility but it’s not the only factor to affect your credibility. Often there have been instances wherein in spite of having a good CIBIL score, the loan applications have been rejected by banks. Also, this does not mean you neglect your CIBIL score, especially when you are applying for a loan.

Besides, having a healthy CIBIL score can also bring in an advantage of low interest rate from your lender, so next time before you apply for a loan always check your CIBIL score to avoid any unforeseen surprises.

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