A credit score, which indicates how trustworthy someone is when it comes to borrowing money, plays a crucial role in one's financial life. Standard credit scores range from 300 to 900, and a high credit score can open doors to bigger loans at better interest rates. If you're wondering how to increase your credit score or how to improve your credit score, factors that influence it include your credit history, such as loan or credit card bill repayment, and your efficiency in managing an EMI card.
Regularly building and managing your credit scores is essential, as they can have a significant impact on your financial credibility. Here's why you should aim to keep your credit score on the higher side:
Higher chances of loan approval: Your credit score is the first criterion lenders use to assess your creditworthiness. If your score is 750 or higher, you are a reliable borrower who is likely to repay loans on time. This increases your chances of being approved for a loan.
- Lower interest rates: Another benefit of having a good credit score is lower interest rates on home loans, personal loans, etc.
- Higher loan or credit limits: A good credit score can also qualify you for a higher loan or credit limit in the future.
How to use the Bajaj Insta EMI Card to improve your credit score
The Insta EMI Card is an excellent financial tool to improve your credit score. As the eligibility criteria for the card is lenient and the pre-qualified card loan limit is moderate, you could easily own this card. It can be a great starter card for someone who is looking to build a credit score by managing it effectively.
- Use the card to shop for smartphones, home appliances, furniture, flight tickets, and many such products on Easy EMIs.
- Spread the EMIs over up to 60 months, making the purchase easy on your pocket.
- Repay the low-cost EMIs on or before the due date.
- By paying off your Insta EMI Card dues on time, you can build a good credit history and even increase your limit.
- Use the card frequently for paying for products or booking hotels etc, which could increase your credit score.
In essence, by using the Insta EMI Card intelligently and responsibly, you can improve your credit score and creditworthiness. Remember to make EMI payments on time, keep credit utilisation low, monitor your credit report, and not take unnecessary debts. With the Bajaj Finserv Insta EMI Card, you get a pre-qualified card loan limit of up to Rs. 3 lakh and access to over 1 million products from more than 1.5 lakh partner stores across 4,000+ cities.
Why does a good credit score matter?
A good credit score is crucial because it reflects your financial responsibility and trustworthiness to lenders. It impacts your ability to secure loans, credit cards, and even housing. Higher credit scores typically lead to lower interest rates, saving you money on repayments over time. Additionally, a strong credit score increases your chances of getting approved for larger loans and opens up opportunities for better financial products. Maintaining a good score also helps in securing favourable terms on insurance premiums and rental agreements. In essence, a good credit score can significantly improve your financial health and flexibility.
Factors that impact your credit score
Your credit score is a crucial metric that lenders use to evaluate your financial health and reliability. Understanding the factors that affect your credit score can help you manage and improve it over time. Several key elements influence this score, and knowing how they contribute can help you make better financial decisions.
The most significant factor is payment history, which accounts for about 35% of your credit score. Consistently making on-time payments for credit cards, loans, and other debts demonstrates your reliability to lenders. Missed or late payments, on the other hand, can significantly damage your score.
The second major factor is your credit utilisation ratio, which is the percentage of available credit you're using. This makes up 30% of your score. Ideally, you should aim to keep your credit usage below 30% of your total credit limit to maintain a healthy score. High balances, even if paid off, can indicate risk to lenders.
Length of credit history also plays a role, contributing around 15% to your credit score. A long track record of responsible credit use shows stability. Younger consumers or those with shorter histories may find their scores are lower, as lenders have less data to assess risk.
Another factor is the mix of credit types you have, such as credit cards, mortgages, and auto loans, which accounts for 10% of your score. A diverse credit portfolio demonstrates your ability to handle various forms of credit.
Lastly, new credit enquiries can affect your score, making up 10%. Opening too many new accounts or applying for multiple loans in a short period can signal financial instability and temporarily lower your score.
By understanding and managing these factors, you can maintain or improve your credit score, enhancing your financial standing over time.
