Hyderabad: You can improve your credit score to 750 and above with a strong financial plan. Banks consider your credit history before sanctioning any new loan. This will be considered before making any concessional offers on your existing loans. To the maximum possible extent, do not allow your credit score to fall below 750. How prompt you are in repaying instalments of your present loans plays a crucial role in determining your credit report.
We should take necessary precautions from taking a loan to repaying it in full. Only then the score will not decrease. The interest rates are increasing and the demand for retail loans is high. Banks are taking more care when giving loans. A good credit score has become a mandatory requirement. This is not impossible. Just pay your instalments and credit card bills on time.
When you are in a financial crisis, you may have delayed payment of EMI and credit card bills. It leads to lower credit scores. If the score is less than 700, there are more chances of loan rejection. Even if a loan is given, they may charge high interest. Getting a loan with a low credit score is a big challenge.
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If instalments are not paid for three consecutive months, banks consider it as a non-performing asset (NPA). Banks write off some amount, considering it a default if payments stop altogether. This is called 'settlement'. If the agreed amount is paid, the debt will be cancelled completely. Banks report this to credit bureaus. Such loans are called 'settled'. It is better to settle the debt as much as possible.
Always pay loan instalments and credit card bills on time. Even one late payment will affect credit score by more than 100 points. To get a good credit score, all payments should be made before the due date. If you have financial difficulties, pay the minimum amount on credit cards on time. Then pay the remaining balance. If the bill is high, the banks will think that you are overusing your card's credit limit.
Be careful when responding to calls asking if you want a loan or a credit card. Don't say `we will see'. Say no if you don't need it. If you say 'will consider', they may raise an application. If there are more applications, it means that you are waiting for a loan. Matter reaches credit bureaus. This lowers your credit score. Repeated rejection of such applications affects your credit record.
Borrowers should check their credit score at least once a month. Many websites now offer this credit report for free. Choose a reliable website for this. Inform the bank immediately if any discrepancies are found. Check the credit report yourself before applying for a loan. If it is not possible to take a new loan based on your credit report, go for one secured by gold and fixed deposits. Reduce credit card usage. Financial discipline is essential here. Only then will your credit score be back above 750 points.
