4 Credit Score errors that you probably make – and how you can fix them

The maintenance of a healthy creditworthiness remains crucial for borrowers who are looking for loans, credit cards or cheap interest rates. In view of the recent reforms of the Reserve Bank of India, which increase the transparency of credit reporting, it is crucial to avoid common pitfalls that can have a negative impact on their creditworthiness.

A creditworthiness is nothing more than a numerical representation of a person's creditworthiness. It generally ranges from 300 to 900. Its calculation is based on factors such as credit history, repayment capacity, repayment behavior and total debt.

Lendingers use this metric to evaluate and understand the risk of money, or to approve credit cards and loans to individuals. These are some factors that negatively affect the creditworthiness if it is not effectively managed.

According to Kanika Singh, Chief Risk Officer IMCG, “are excessive loan inquiries, increased loan consumption, unresolved outstanding fees and frequent opening of new accounts Key factors that have a negative impact on creditworthiness and thereby influence the loan authorization, interest rates and the trust of the lender.”

So let's look at four frequent mistakes that can make your loan scores be reduced.

1. Missing or delay in payments

The consistent and timely repayment of EMIs and credit card invoices is extremely important and of the greatest importance. Even a single missed payment or a late submission can significantly reduce your creditworthiness. Since the payment history is about 30-35% of its total credit score. In addition, overdue payments can remain in their credit for years and thus hinder future loan permits.

2. Ratio with high credit consumption

The use of more than 30% of their total available credit limits can show potential lenders financial difficulties and burdens. A high credit rate rate affects your creditworthiness and your general loan profile. It is therefore recommended by experts to keep the credit load below 30% in order to maintain healthy creditworthiness.

3 .. Apply for several credit lines at the same time

The submission of several credit applications in a short time can now lead to numerous hard inquiries in your credit. This type of behavior also shows a higher risk in connection with the credit loan and can immensely reduce its score. For this reason, it is advisable to interpret credit applications and only apply if necessary.

4. Close old credit accounts

It is important to recognize that the closure of long -standing loan cards, personal loans, etc. can shorten your credit story and increase your general credit rate rate. In addition, a longer credit story shows its ability to efficiently manage creditworthiness over time and thus positively influence their score.

Therefore, you should consider instead of closing unused accounts, you should consider keeping them open and using it occasionally. This can make a major contribution to the definition of your credit behavior and general accountability as a borrower.

Diploma

Avoiding these frequent errors can therefore significantly improve and improve your creditworthiness and general credit profile. This increases your financial credibility and improve your chances of ensuring favorable conditions in the future.

Disclaimer: MINT has a connection to FinTechs for providing loans; You have to pass on your information if you apply. These connections have no influence on our editorial content. This article only intends to sharpen and sharpen awareness of credit needs such as loans, credit cards and credit scores. MINT does not promote or promote loans because it goes hand in hand with a number of risks such as high interest rates, hidden fees, etc. We advise investors to discuss with certified experts before taking a credit.