It is important to be financially active in today's world. You should be aware of your investments, credit score, and other financial details so that you can access and use them in times of need. Managing your credit score is one such important task as it determines your credit underwriting process in banks and other lending institutions. Here are a few things that you need to know when it comes to managing your credit score.
How important are credit scores?
The credit score is a numeric value that ranges between 300 to 900 and establishes the creditworthiness of an individual. It mainly states how financially responsible a person is and the chance of them repaying the borrowed loan within the due time. The higher the score is, the more favorable their chances are in the credit underwriting process in banks. Similarly, a low/poor credit score will lower the borrower's chances of getting their loan application approved.
These activities can lower your credit score
When it comes to managing your credit score, you must first know about the activities that can adversely affect it. Here is a list of them.
● Paying loan installments and bills after the due date: If you are a person who pays their loan installments and credit or utility bills after the due date, it can negatively affect your credit score. The late payments can get recorded in your credit history and make the future credit underwriting process in banks harder for you.
● Utilizing a high credit limit: Banks and digital lenders favor those individuals who keep their spending to lower than thirty percent of their credit limit. On the other hand, if you spend a higher percent of your credit limit, it can make you look like a credit risk individual which will also lower your credit score.
● Making a lot of new credit applications within a small time frame: Each new credit application is recorded in your credit history and affects it for about a year or so. If you wish to have a high credit score that can allow you to get favorable loans from banks and digital lenders, you should wait for 6 months to a year before applying for new credit.
Things you can do to boost or maintain a high credit score
Here are a few things that can help you to get a higher credit score which can help you to get favorable digital loans in the future.
● Increase your credit limit, not your credit spending: If you wish to get a high credit score, you should ask your credit card issuing authority to increase the credit limit on your card. Still, you must keep your spending to thirty percent of your credit limit.
● Pay your EMIs and bills on time: You should pay your credit bills and loan EMIs in full amount before the due date arrives.
● Check your credit report: Your credit report gives a detailed account of your credit history and can help you to track any anomaly in it.
These are some tips that can help you to boost your credit score so that you can get more favorable digital loans in the future.
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