It’s 2020 and apart from Coronavirus, the only important thing that people focus on is maintaining their credit score. Why so? It’s simple! A salaried person with a good credit history is a reliable person as per the Bank/NBFC. These Banks/NBFCs will offer an instant personal loan at the best interest rates and deals possible.
But what if my credit score is not good?
Then we must break the bad news to you! Without a good credit history, getting the best personal loan interest rates is almost impossible. Banks will consider you as a credit hungry customer and might either;
- Give you the personal loan at higher interest rates OR
- Reject your loan application (This will further affect your credit history)
How do Banks know if I am a reliable customer?
Banks run a personal loan eligibility check to understand your income & credit history. If you fulfill the minimum requirement, then you surely can get your loan application approved.
What are the important things I can avoid for a better credit score?
We have listed 4 important points that you must directly avoid if you need a better credit score.
- Do not Default. Ever! – The thumb rule for any person will be that they must always pay their bills on time. Do not default on your credit card payments or EMI payments on personal loan. Any one default can bring down your credit score. Avoid the practice of “Minimum amount due” as the Bank understands that you cannot pay your bills fully.
- Avoid High Credit Utilization on your cards – Every credit card has a limit. Try to ensure that you don’t max out your limit. If possible manage a healthy credit utilization ratio. This ratio must hover less than 35-40% of your credit limit. It shows the Bank that you only need little credit and your income is sufficient to fulfill your needs.
- Avoid becoming a Loan Guarantor/Co-Applicant – There are multiple advantages of becoming a loan guarantor/ co-applicant for personal loans. But remember that if the other applicant doesn’t repay the loan EMI or cannot repay it at all, then you will also have to bear the brunt of it. It will directly affect your credit score.
- Do not cancel older cards – Be careful when it comes to your old credit cards. If you cancel them, it will only affect your credit history. Yes, when you close a card, all your credit history related to that card also gets wiped out. This will have a direct impact on your credit history.
Hence you must be very careful when it comes to improving your credit score. Be a reliable person and always pay your bills on time. If you are looking to find the best deal on personal loans, visit Ruloans.com!
