A borrower with a good credit score often enjoys credit-based perks like higher negotiation power, lower rate of interest, desired loan amount, etc. Apart from this, a good credit score makes a borrower earn the status of a good debtor. Similarly, a good credit score is one of the most important factors taken into consideration by lenders, banks and financial institutions to determine whether to lend a loan to the applicant or not.
In this blog, we will explain the importance of a good credit score and how you can achieve it smoothly.
What is a Good Credit Score?
A good credit score ranges from 750-900. A borrower whose credit score is closer to 750 or near to 900 is considered to be a good debtor. Banks, lenders and financial institutions often give these borrowers a preference over other applicants. Besides, a good credit score simply proves that the better the credit score, the higher will be the chances of getting a loan or credit card approval.
Credit score can further be explained as-
- Credit score ranges from 300-900
- The score showcases the user’s creditworthiness
- A credit score is generated from the user’s credit report
- Anything negative in the credit report directly affects the credit score
Read More: Can I Get a Loan With a Credit Score of 550
What is the Importance of a Good Credit Score?
The following points define the importance of a good credit score and what benefits it can offer to a borrower-
- It depicts the responsible behaviour of the borrower against the credit repayment process
- A good credit score can be earned if the credit repayment history is strict and strong
- Lenders, banks and financial institutions mandatorily take a look at the borrower’s credit score before rejecting or approving a loan or credit card application
- A good credit score increases the chances of loan or credit card approval
- A borrower with a good credit score is always given preference over an applicant with a low or fair credit score
- A borrower with a good credit score is often seen as a good debtor
- With a good credit score, the borrower can simply negotiate with the lenders, banks or financial institutions to raise the credit bar
- Banks, financial institutions, lenders prefer to offer top-notch credit cards to borrowers with good credit score
- Upon request, a borrower’s credit utilization ratio can be increased
- A good credit score makes a borrower acquire the desired loan amount along with the power to negotiate the credit amount
- Banks, lenders and financial institutions charge a lower rate of interest on the borrower’s acquired loan amount
How to Get a Good Credit Score?
Though there are multiple ways to get a good credit score but when followed together, they can bring amazing results within a particular time period-
- Check credit report twice a year
- Raise a dispute in case there is any error/issue in the credit report. Resolve the comments in it too at the earliest
- Always pay credit dues on time
- Keep the repayment history clean, disciplined and strict
- Resist making multiple hard inquiries
- Do not apply for a new loan immediately after the rejection of your previous loan application
- Limit the credit utilization ratio to 30%
- Do not leave any outstanding balances
- Set reminders for loan EMIs and credit card payment due dates
- Submit the cheque a few days prior to the due date
- Most importantly, be patient, give some time to enhance your credit report
