Consistently monitoring and checking your credit score is vital for maintaining financial stability. A high credit score permits applicants to secure favourable credit cards, personal loans, and other similar credit lines to meet daily expenses.
Credit scores continue to remain a widely used and recognised benchmark of creditworthiness and repayment ability. Lending institutions consider a credit score of over 750 to be reputable. It permits borrowers to exercise immense freedom in their borrowing decisions.
Consistent reevaluation and following up on one’s own credit score at regular intervals allow users to detect mistakes in their reports. Errors can range from wrong names to cleared loans marked as pending to mistakes in personal details. One must understand these shortcomings clearly before going ahead with new credit card and personal loan applications.
How to access your credit score for free?
- Visit the official website of your respective credit bureau.
- Register with your basic details such as PAN card number, date of birth, mobile number, and email address.
- Verify your identity by completing OTP or KYC verification to ensure secure passage to your credit profile.
- Once verified, carefully check your credit score. You can also download your report and save it for future reference.
- If there are errors or doubts, you can reach out to the customer support executive and resolve them.
What shapes your credit score?
Factors such as employment history, salary, and past defaults, if any, are considered when assigning a credit score to an individual. This credit score is like a report card. The higher the score, the better the performance of an individual with credit management, and the performance more easier for new personal loans, home loans, credit cards, etc. All these factors are looked at holistically.
For example, a high salary alone doesn’t guarantee approval; lending institutions generally value a strong credit history more than income. Even individuals with a low salary or modest earnings but excellent credit repayment history are considered low-risk borrowers.
Amit Bansal, founder of BharatLoan, says, “Credit score showcases repayment discipline. For sustainable lending, both carry weight, but the credit score often tips the balance. A high salary with poor credit is riskier than a modest income with a strong credit history.”
How does a good credit score open doors for better loans?
A good credit score, 750 or above, signals responsible borrowing behaviour and can help borrowers unlock better financial opportunities. Personal loans, car loans, home loans, and credit cards are generally approved easily for individuals with solid credit scores.
On the other hand, getting approval for new loans or credit cards becomes very difficult for borrowers with a poor credit score or a history of defaults.
Practical tips to maintain a healthy credit score
Regular monitoring is essential, but sustaining a healthy credit score requires disciplined financial habits:
- Pay your credit card bills, home loan EMIs, and personal loan EMIs on time.
- Focus on keeping your credit utilisation in check and below the 30% mark.
- Avoid sending multiple loan and credit card applications in a short period of time.
- Follow up with your credit report consistently. Check for errors and report.
- Maintain a mix of credit types, such as secured and unsecured credit, and keep older accounts working.
For all personal finance updates, visit here.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards, and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
