Hyderabad:Loan repayment history is vital for a good credit score as you will be offered new loans and can get concessions on interest if your credit score is above 750. Many people lower their credit score with minor mistakes. See what precautions can be taken to avoid such a situation.
Credit score range
Banks will give preference to those whose credit score exceeds 750. This is not so difficult to achieve. All you have to do is pay the installments and credit card bills on time. In reality, it is not so easy to follow as you may delay payment of EMIs and credit card bills for various reasons, including the pandemic, as it created financial hardships for many. If a person has a score of less than 700, creditors are more likely to reject his/her application. Sometimes even they grant there are chances of charging high-interest rates. So, borrowing is a big challenge when you have a low credit score.
Loss with ‘settlement’...
Non-repayment of loans can have a negative impact on a person’s credit score. If the borrower does not pay the installments for three consecutive months, banks will treat it as a non-performing asset (NPA). They will try to cancel the loan for some amount assuming it as the default if the payments were stopped completely. This is called a 'settlement'.
If the agreed amount is paid, the loan will be completely cancelled. Banks report this to credit bureaus. Therefore, the loans are termed as 'settled'. Banks may not offer new loans when the term 'settlement' term appears in the credit report. This can damage your credit report track record in the long run. If you have already 'settled' your debt, if possible try to repay it in full. This will enhance your credit score as your loan will be 'closed' from 'settled'.