Sunday, June 16

List Of The Factors That Determine Your Credit Score

When you apply for a loan, lenders and other potential creditors will check your Cibil score to judge your financial stability and propensity to repay debt. Y Your chances of being approved are higher with a higher CIBIL score.

Faster loan or credit card approvals are dependent on your credit score. It is essential when determining whether banks and non-banking finance companies will approve your loan application. A credit score is a numerical analysis based on your history of timely loan repayment. Your credit score is a projection of your creditworthiness, and the higher it is, the more likely it is that a loan application will be approved. As a result, it is critical to keep your credit score in good standing. The following are the key variables that have the most impact on your credit score:

History of payments (Weightage: 35%)

Your payment history contributes significantly to the calculation of your credit score. Your credit history demonstrates your ability to fulfil your financial obligations meticulously by making timely credit and EMI payments. In contrast, when you miss credit card payments or don’t pay back loans on time, your credit health suffers, and your credit score is significantly lower. Therefore, you should always make your payments on time to maintain your credit score.

Amounts Due (Weightage: 30%)

You should pay your debt immediately to avoid damaging your credit score. The amount that is owed and the credit score are directly related. Your credit score rises now to the amount of outstanding debt you have, and vice versa.

Credit history duration (Weightage: 15%)

Your financial stability can be seen from how long your credit history has been open. In contrast to new customers with little or no credit history, the bank gives credit to its long-term customers more quickly because they are confident they will pay it back in the future. Consequently, a more extended credit history can raise your credit score.

Taking on any additional debt (Weightage: 10%)

Remember that inquiries will still affect your credit, even if you are rejected or decide not to apply for a loan or credit card. The lender will look at your CIBIL report when you use it for a credit product. A different term for this action is a complex search. Multiple difficult questions are asked about your account when you submit multiple applications. Your credit score and credit appetite will both be affected. So, if your initial credit application is turned down, wait a while before attempting to obtain credit again.

What types of credit do you use (Weightage-10%)?

Your credit score could improve if you responsibly use different credit products, such as instalments, revolving, and available credit. You can obtain a good credit score without having a lot of different types of credit, though.

To conclude: Your credit score is determined by all these elements, so pay close attention if you want to get a loan quickly. Use any financial app to get a quick credit score check for free to keep track of it.

Before trying to get a loan, always do a CIBIL score check.