Wednesday, September 28

Reasons Why You’re Credit Score Can Be Poor And How You Can Boost It

Credit bureaus keep track of every loan and credit card payment made by every person. Lenders send the bureau information about you from time to time, and your credit score is based on that information. Your pan card cibil score is the one most people use. It usually falls between 300 and 900, and a score of 750 or higher is considered good by lenders. But some of the things listed below can cause your credit score to go down. Result? If you apply for a credit card or personal loan at a bank or other financial institution, you might not get it, or if you do, the interest rate will be much higher.

Let’s first start by looking at why your credit score might be low:

High Credit utilisation ratio: For those who don’t know, the Credit utilisation ratio is found by dividing the total amount of credit you’ve used by the total amount of credit you can use. If your ratio is high on the free cibil score calculator, it means you depend more on credit, which makes you more likely to miss payments on loans or credit card bills in the future. Because of this, your credit score goes down, which can make it harder to get a loan, especially an unsecured one like a personal loan.

Multiple loan applications at the same time: When you apply for more than one credit card or loan at the same time, the number of hard inquiries on your credit report tends to go up, which drops your score on the free cibil score calculator. Also, these inquiries show up on your credit report, which shows that you are a credit-hungry borrower who might not pay back loans. Because of this, your pan card cibil score usually goes down.

Outstanding unsecured debt: If you have too much personal loan and credit card debt that is not secured, it can hurt your credit score. If you need credit to pay for an emergency and can’t use your credit card, you should apply for a secured loan by putting up an asset instead. Your credit score won’t go down if you have a good balance of secured and unsecured loans. This is called “credit mix.” You can check it on the free cibil score calculator.

Bad payment history: If you have missed or been late with your EMI payments in the past, your credit score will go down. As was said above, banks and other financial institutions regularly give credit information about your credit history. If you don’t pay your EMIs, even just once, your credit score will go down. According to a credit score study for pan card cibil score, a 30-day late payment can drop your score by 100 points. Your history of making payments is one of the main things that go into your credit score, and a high credit score can make it easy for you to get a loan.

Paying only the bare minimum: The part of the principal that is still owed each month is the minimum amount due. If you only pay the amount you owe, the interest will keep adding up, which will only put you in a trap of debt. Because of this, you should always pay your credit card bills in full. The adverse effects of bad credit habits can be visible when you check score on free cibil score calculator.

Errors in your report: Sometimes, your credit score can go down because of administrative mistakes. For example, if your report says that you missed a payment when you didn’t, or if your bank takes too long to report your loan status, or if there are mistakes in your active loans, this can all hurt your pan card cibil score. So, you should check your credit report often, and if you find mistakes, you should file a credit score dispute as soon as possible to get them fixed.

Even if your credit score is low, you might still be able to get a new loan, but the lenders will charge you a very high interest rate. Follow these important steps to improve your credit score if you don’t want to pay a higher interest rate:

Don’t go over your credit limit. As you probably know, credit cards have a set credit limit, which is the most money you can spend at one time. If you want to keep your credit score from going down, you should try not to go over the limit. If you end up using all of your credit, a credit will think that you can’t handle your debt well, which will lower your pan card cibil score.

Pay on time. It goes without saying that you shouldn’t miss your loan payments. Your credit score can go up a lot if you’ve always paid your bills on time, which will reflect in your free cibil score calculator as well.

Put a reminder: It works every time, no matter how vague it sounds. You can set up your EMI payments to be taken out of your account automatically, so you never forget to pay a bill.

Don’t try to get more than one loan at the same time: If you already have a personal loan, make sure you pay it off before getting another one. Also, you should use the loan amount to pay for your needs. If you were turned down by a lender, you should wait a while before trying again.

Improve your credit utilisation ratio. A crucial way to raise your credit score is to keep your credit utilisation ratio below 30%. This gives the impression that you don’t rely on credit as much, which is a sign of good financial behaviour.

Overall, by now, it must be clear that if you want to keep your credit score in good shape, you should avoid making the mistakes above and follow the steps mentioned to remain credit healthy to take a loan or credit card whenever required in life.