A good credit score makes an individual look creditworthy and makes it easier to avail a loan. Even if your score is not good its never too late to start building a good credit score. However, youngsters in their early 20s find it difficult to build their score early in life. Since most lenders are often reluctant to grant a loan to young professionals, due to lack of stability and income. It becomes hard for such individuals to build a good credit score so early. When you apply for a loan or credit card you need to check credit score to get faster loan approval. A high credit score will help you get lower rates from financial institutions.
Youngsters who are willing to work on their credit score have the option to approach new-age tech firms that help Millennials build a good credit score and maintain financial discipline. Individuals under the 22 -25 years old segment find it hard to maintain a score and get a loan. As these individuals have just entered the job market and are considered unstable by the lenders.
What’s a Good CIBIL Score?
CIBIL reports compares your past credit history of three years in the calculation of your credit score. Apart from the credit history, other factors like your credit utilization ratio, outstanding loans, loan terms and percentage of the loans may impact your credit score. CIBIL Score ranges between 300 and 900, wherein a score up to 900 is considered excellent to avail loans on a lesser rate of interest from lenders. You can get a check credit score online for free and you will receive a digital copy of your free CIBIL report within the next 48 hours.
Tips to Build a Good Credit Score
- Get a Low limit Credit Card
If you do not have a credit score to start with you can apply for a credit card with a low limit. Credit cards do come with the highest rate of interest but with a credit card, your credit score gets a boost if used in a financially responsible manner. Applying for a credit card at a reliable financial institution can help bring in financial responsibility and discipline. Some lenders also offer benefits, rewards, cashback, among other things. Try to pay your EMIs in full and enjoy rewards for being diligent and disciplined and you will see that your credit history automatically gets built over 6-12 months. It is worthy to note that the eligibility criteria might differ for every bank offering loans whether you have a good score or you are falling behind in income. Hence, ensuring a healthy credit score is necessary before you apply for a home loan.
- Keep a Track on your Score
Being a first-time borrower or credit card user you need to focus on tracking your credit score. There are many firms that offer credit score tracking service along with a detailed analysis of your financial health. At Finserv MARKETS you can get a financial health check report to get detailed information of your credit standing. You can also do a check CIBIL score by PAN Card online to track your CIBIL score. Keeping a track on your credit score will help you understand how your financial actions have an impact on it. It will also help you avoid missing any error or wrong transactions that are recorded in your credit report.
- Avoid unnecessary spending and make timely Payments
To successfully build your credit score avoid applying for more than one credit card. When you apply for multiple credits at the same time you are seen as credit hungry in the eyes of the lenders. The lenders start to question your ability to repay the loan which may ultimately result in rejection of your loan application. In fact, you should also try spending much less than you can afford on our first credit card. Keep your credit utilization ratio low and do not miss your EMI payments, which will ultimately help you build your score. A record of on-time payments contributes to building a positive credit history. Before you apply for a loan, you need to thoroughly check your CIBIL report. You must verify your credit report at least twice a year to identify any errors or misinformation.
By following the right practices such as timely payment of dues, no defaulting, and avoiding additional debt can help build your credit score. For a loan, you can avail a Bajaj Finserv personal loan at Finserv MARKETS using Finserv MARKETS App and avail quick disbursement, low EMI, minimal documentation and a host of other features. Your online personal loan application can be approved within minutes and the loan amount will be credited to your bank account within 24 hours! Your CIBIL Score determines your creditworthiness for a loan, you can check credit score for free along with a Financial Health Check Report on Finserv MARKETS.