Neglect few Mistakes- Keep your Credit Score Clear

Maintaining good financial health is what matters the most in a family. If you are seriously concerned about your financial goals, maintaining a good credit score is a must. If you are having a strong and clear credit score then the lenders will not think twice before granting you the loan. This score is a numerical representation of everybody credit performance, even minor mistakes in credit history can have continuing financial cost.

Whether it is a landlord; insurance company or even employers these days check the credit reports.

Mind it! You must have a clear credit report.

Even if you apply for a home loan, your interest rates will soon be linked to your credit score. If you have a clear credit score then you will pay less EMI’s and vice- versa. Here you can take an example of the home loan in Tata Primanti a residential project from Tata Housing, starting from Rs. 2, 57, 00,000 Onwards. And your credit score is above 750 points then your home loan interest rate is quite affordable in comparison to other individuals.

Few important credit score factors:

Each factor has its own importance and one overcomes the other. But the most important out of all is the payment history and credit utilization.

1. Payment history will be checked; every lender will show immense interest in checking that how reliable you can pay your bills, so they will check your payment history.

Your past actions somehow decide your future results.

If you have cleared all your bills on time, you will have a clean record and also on- time bill payment can make a positive impact on your credit score.

2. In credit score calculations, credit utilization ratio is important. Your credit utilization rate is calculated by dividing your total credit card balances by your total available credit.

See if your ratio is less that 30% then there is a positive sign for you, otherwise sorry; you haven’t maintained your history well.

We all do these silly mistakes which harm us in future. Heed down to know what these few mistakes which you can really avoid are:

Missing repayments

It’s very normal that we forget to pay our bills on time and later we realize that now we have to even pay it with due charges. Many people consider that missing or late payments of EMIs dues do not cause much harm only if they are repaid afterward. On the other hand, as banks & other financial institutions ignore those people who have previously failed or missed any EMI’s or defaulters.

Make yourself little aware about the right time payment!

What to do: Make sure you pay before and on time. If you forget then set a reminder in your phone, this is only thing stick with you for 24 Hrs. You will automatically remember everything.

Having high credit consumption ratio

Credit departments employ your credit consumption ratio while calculating your credit score.  Credit consumption ration is the proportion of your credit card balances against the complete credit limit on hand on all your credit cards. As banks consider credit utilization ratio of over 30 – 40% as a sign of credit famishing, credit departments decrease your credit score on breaking this level frequently.

What to do: If you regularly use 30 – 40% of your credit limit, then ask your bank to raise your current credit limit or get an extra credit card. Pay your debt on time and avoid the large debt balances; in short I can say: decrease the ratio and increase the credit score.

Too many credit applications in a short span

It is very necessary to understand that how too many applications for new credit can affect your credit score. Keep in mind that your every application will be listed on your credit report. Every application will be considered as a hard inquiry and this can badly affect your score. Credit agencies consider too many applications within a limited time frame as an indication of credit hungriness.

If you have already applied for too many cards, your score will bounce back!

What to do: You can use online tools to calculate the loan rather directly concerning with banks. Marketplaces also ask for your credit statement to present you a range of credit products available, derived from credit score and other methods, these are measured as soft inquiries and do not decrease your credit score.

Selecting credit card or loan settlement

Banks often suggest one-time payment to borrowers having failed to pay for six back to back months. People are enticed to give a lump sum amount, generally higher than the principal amount, and rest of the outstanding amount is ignored.

On the other hand, bank report such settlements to the credit agencies, which after that register in your credit history and also affect your credit score. Because banks abstain from lending to individuals who are non-payers (defaulted) in their credit history, credit bureaus cut the credit score of such individuals.

What to do: First of all avoid such kind of situation; if not then make sure you get the certification of “no-dues” from the bank after lump sum payment. Ask your lender to change the status of that account as “closed” in place of “settled”.

Closing old credit accounts

Before cutting out the credit cards with a though that they will increase your credit score. So, give a pause!

You must know that closing your old credit account can further shrink your credit score also it cut total existing credit limit. This with raises your credit utilization share, in that way forcing agencies to cut your credit score. One more fact is that ending a secured loan may enhance the part of unsecured loans in your credit mix up. As bank like better borrowers with a big part of secured loans, amplification in the share of unsecured loans will lead to an extra drop of your credit score.

What to do: Make sure you augment your credit limit or obtain an extra credit card(s) before ending a credit card or credit account. In credit, give priority to settling unsecured ones before closing secured loans.

Not reviewing credit reports commonly

As a lender study your credit report to estimate your loan or credit card application. A minor mistake on the part of the lender or bureau might unfavorably affect your credit sanction in future. As of now, regular checking of your credit report is the only method to identify such mistakes.

What to do: Use financial marketplaces to find your free credit report online at least once in every 2 months. As much as best your credit score, the better is the opportunity of getting a good credit card or a loan at positive terms. Many mistakes mentioned above will reveal in your credit report for ever, and may unfavorably impact your future loan and your credit card applications.

Hence these all are some of the tips which you can apply to improve your credit score. A credit score is meant to predict how reliable you’ll be with borrowed money, so try to keep it clear.