Maintaining one’s credit score is highly necessary if you are looking to apply for a home loan or any other kind of loan in the future. After all, your credit score is what determines your overall creditworthiness. The score is a figure anywhere between 300 and 900 and is worked out from your own credit report. These reports are compiled by CIBIL and Experian among other credit bureaus. Financial institutions use the credit report to analyse your credit card application and loan applications. Those with high credit scores will have applications processed swiftly and loans will be disbursed at lower rates of interest.
Insurance companies will look at your credit score in order to ascertain whether you can be eligible for lower premiums while purchasing policies. Many companies have also started analysing credit scores while doing background checks of prospective employees. What you should understand is that a low credit score is indicative of financial difficulties, high debt and missed payments.
A credit score of 750 or higher will increase your chances of getting your loan sanctioned easily. You should maintain your credit score properly by paying your dues in a timely manner. Paying late and missing EMI payments or credit card payments will naturally hamper your credit score. Always make sure that you use optimal credit and that your monthly debit is lower than 50% of your net income every month. Always check your credit score and eligibility prior to applying for loans. Hard enquiries are made whenever you apply and this may lead to your credit score getting reduced and the loan being rejected.
You should always check your score and make sure that you are eligible for a loan in the first place as mentioned. Multiple applications will only serve to make lenders feel that one is hungry for credit and it will also lead to your score getting lower.