Credit Score: If you have ever approached any bank or lending institution to secure loans to meet your financial goals. You would probably encounter the term ‘Credit Score’ in the loan application forms or the bank staff might ask you regarding the credit score.
Read More: 5 Must-Do Financial Tasks Before March 31
The credit score emerged as one of the key parameters for institutional leaders. Here is a comprehensive guide to understand the importance of credit score, a step-by-step guide to check and improve it.
What Is Credit Score?
Credit score is a numerical representation of an individual’s creditworthiness, indicating their likelihood of repaying borrowed money or honouring a financial obligation based on their past credit behaviour. It is a crucial factor that lenders, such as banks, credit card companies, and mortgage providers, use to assess the risk associated with extending credit to a borrower.
Credit scores typically range from 300 to 850, with higher scores indicating a lower credit risk and lower scores indicating a higher credit risk. The score is calculated based on various factors, including previous payment history, length of credit history, credit utilisation, credit repayment, types of credit and other details.
Why Credit Card Score Is Important?
Credit score is a crucial factor that lenders use to evaluate your creditworthiness when you apply for loans, credit cards, or other forms of credit. A good credit score demonstrates responsible financial management and makes it easier to qualify for loans with favourable terms and lower interest rates. Additionally, it can lead to better credit card offers, higher credit limits, and access to premium rewards and benefits.
How To Check Credit Score? Here’s A Quick Step-By-Step Guide
Step 1. Get Your PAN Card Details Ready
Have your PAN card and details like name, date of birth, and PAN card number on hand.
Step 2. Visit the Bureau’s Website
Read More: 1 vs 3 vs 5 Year FD Rates: Check How Much Return You Will Get From Major Banks
Go to the official website of your chosen credit bureau and ensure it’s secure.
Step 3. Find the Check Score Option
Look for the “Check Your Credit Score” option on the homepage.
Step 4. Enter Your PAN Details:
Provide your PAN card number and other necessary personal details accurately.
Step 5. Complete Identity Verification
Some bureaus may require additional verification steps to protect your information.
Step 6. Access Your Report and Score
Once verified, you’ll get access to your credit report and score. Review it for your credit accounts, repayment history, and overall creditworthiness.
How To Improve Credit Score? Here’s a Quick Guideb To Boost Your Credit Score
1. Timely Payments: Pay your bills on time, every time, to avoid negative impacts on your score.
2. Reduce Credit Card Balances: Aim to keep your credit utilisation ratio below 30 per cent by paying down balances.
3. Limit New Credit Applications: Minimize new credit inquiries to prevent temporary score decreases.
4. Regular Monitoring: Check your credit report for errors and dispute inaccuracies promptly.
5. Diversify Credit Mix: Maintain a mix of credit types, but only open new accounts if manageable.
6. Keep Old Accounts Open: Closing old accounts can shorten your credit history, so keep them active when possible.
Read More: Top 10 Banks Offering Lowest Interest On Personal Loan- Check Full List
7. Mind Credit Limits: Request credit limit increases sensibly to reduce the utilisation ratio.
8. Responsible Usage: Use credit responsibly by avoiding maxing out cards and managing debt wisely.
