Why Should You Maintain A Good Credit Score?

Why Should You Maintain A Good Credit Score?

A good credit score gives an idea to Banks and Lending Institutions of how you can repay the amount lent. Therefore, a high credit score must be maintained . The credit bureaus of the country determine a credit score after taking into account many factors , such as the history of repayment, credit exposure, and mix of credit, credit inquiries and the period of the credit history. A credit score ranges from 300 to 900 . The credit score of 750 and above is usually considered good suitable for lenders. You should then still take action to have credit score close to 900. Let's discuss how important it is to have a healthy credit score.

Importance Of Maintaining A Good Credit Score
  • Makes you eligible for loans: You get the approval for loans and credit cards with a high credit score. If your credit score is good, it means that you are paying your loan on time and that you have experience with the handling of credit. It gives lenders a strong reason to provide your loan, since you are unlikely to default.
  • Credit cards: In addition to credits, high credit score allows you to avail credit card with greater rewards and benefits . You can get credit cards suitable for your needs with a credit score of 750 and above.
  • Lower rate of interest: One of the advantages of a healthy loan is that banks may approve you loans at a lower rate. Taking into account the history of your repayment, there is a large likelihood of you having interest rate cuts on loans.
  • Higher credit card limits: A high credit score not only gives your credit card/loan interest rates lower, it also allows you to avail loan hassle free and without any difficulty. On the other hand, a poor credit score will lead to a lower credit limit. A high credit score shows that you are managing your credit in a good way and therefore banks can consider issuing you a credit card with higher limit.
  • Quicker loan approvals: Several lenders provide pre-approved loans to borrowers with a long history of credit and a high credit score. Faster bank loan approvals are one of the greatest advantages of a high loan ranking. Your request for a loan is accepted instantly and has no waiting time.
  • For the future: Even if you are not planning to apply loan or credit card application in the immediate future, make sure you maintain a decent credit score and good repayment loan track.
Tips To Maintain A Healthy Credit Score
  • Pay all your bills or EMIs on time.
  • Avoid delay in paying bills.
  • Maintain a low credit utilisation ratio.
  • Do not close old credit cards as you will lose out on good credit history.
  • Avoid making multiple credit inquiries at the same time.
  • Do not apply for multiple loans or credit cards unless you really need it.
  • Maintain a balance of secured and unsecured loans.
  • Review your credit report periodically.

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