Consumers are increasingly getting conscious about their credit profile. There has been a phenomenal rise in the number of people checking their credit score.
As per BankBazaar’s Moneymood 2020 report, there was a 111% year-on-year growth in people checking their credit scores. Credit score is important as banks and other lending institutions check it to determine the credit worthiness of an individual before approving a loan. Usually a score of 750 or above is considered to be a healthy credit score, which helps borrowers get lower interest rates on loans and attractive offers on credit cards.
As per the survey, 68% of those who checked their credit scores had a score of 750 and above. Here are a few interesting facts about credit score:
– A credit score of 750 or above will reduce the chances of loan refusal and you will stand a better chance for getting your loan approval. The lender will also consider your income and employment history besides the credit score. But you can rest assured that if your credit score is good, the chances of loan refusal are low and you can get better interest rates than someone with just an average score.
– If your credit score is low, you can increase it by paying your dues on time regularly. Also, do not apply for credit products if you do not need them. Each new application for a credit product leads to a hard check of your credit score, which can lower the score marginally. So apply for only those loans you really need, and avoid making simultaneous applications.
– Your credit score will be non-existent if you haven’t ever availed a loan or owned a credit card. Lenders may be hesitant in approving high-value credit to new borrowers. One of the best ways to initiate a healthy credit history is by taking a basic credit card and paying your dues on time.
– If you have taken a loan or use a credit card, it would be a good idea to check your credit score periodically – at least once a year. Checking your own credit report would not damage your score. It is advisable to check your credit score before applying for a new credit product.
– If you have closed a loan and your credit report is not showing the updated status, you can immediately flag it to your lender. It is important to get errors corrected to improve your credit score. The error should be brought to lender’s notice as it will send the corrected report to credit bureau, which will start reflecting in a month.
BankBazaar.com is India’s leading online marketplace for loans and credit cards.