A Better credit score for better credit card !!
It isn’t rare to hear that a loan or a credit card application, of someone we know, got denied owing to a bad credit score. And then you would wonder where you would stand, had you applied for that loan or credit card.
As we progress into a more evolved form of economy, cash transactions are gradually giving way to credit dealings. While in a country such as India, credit transactions haven’t really taken over the western way, but have nevertheless become a major trend giving the consumers higher purchasing power. Before you apply for credit card or loan it is crucial to understand the concept of credit score and how it affects you.
So what really is the credit score? It is a number generated by a mathematical algorithm using information given in your credit report. Designed to predict say the likelihood (as accurately as possible), that you will be able to fulfill your credit obligations well enough. With platforms such as credit bureaus (like Experian, Equifax, High Mark and CIBIL) in place, the ecosystem is more transparent and efficient helping lenders as well as identifying right consumers for extending credit or loans. Having a healthy credit profile and a score also increases the possibilities of a quick processing of your application for credit cards.
Here are a few tips on maintaining and reviving your credit score.
Know your score:It pays to know your credit profile and credit score. You just need to submit your details online, make payment for a small amount and get a detailed report online. As easy as your online application for credit card. There could be an incorrect record spoiling your score and fix could be easy. Take measures that can correct such errors.
You can get your credit profile from credit bureau’s website
Draw your payment plan: To maintain and revive a healthy credit profile it is important to lead a healthy credit life. Make a comprehensive payment plan, including the dates you need to pay off loans, bills etc. The ECS payments for fixed, recurring amounts works best and ensures timely payment. For the rest, set online reminders and pay preferably online. It is quick both while making as well as receiving payment. Avoid part payments. It doesn’t really help and affects your score.
Consolidate: Too many loan accounts are never easy to manage. Approach the bank and try and transfer the balance outstanding into a single one. This holds true for credit cards as well. Instead of a galaxy of cards, a few (say 2-4) of select cards should hold good based on their usage. Also having several loan or credit card applications is seen as a credit hungry behavior and brings down your credit score.
Judgment Call:Being a guarantor to someone may not always turn out well. Do your due diligence on the borrower before agreeing to be a guarantor for him. A default on his behalf will negatively affect your credit score.
Bank Settlements: Accepting a settlement on a long pending dispute with the bank brings down your credit score. It is advisable to sit and be open for a dialogue to resolve the issues amicably. You could have some weak links during the discussion. It is better to face them than opt for a settlement.
A higher credit score makes it easier to gain assurance and trust from banks.