Have you ever wondered why your personal loan, educational loan and home loan has been rejected without any reason? When you apply for a loan, banks judge your ability to repay the loan on various counts including your age, income, job stability and primarily based on your credit report - which is a reflection of your true credit worth. So before you approach a bank for a loan, check where your credit report stands. When you have a credit score above 750 points, any bank will give you a loan without any hesitation. So it is important to maintain a good credit score to get a loan.
If you live under the same roof as someone who has slipped up on a loan payment or credit card dues and hence been reported to CIBIL, Banks probably will have the address stored in their defaulters database. In such a case, the probability of your loan application to be rejected is likely to be high. The reason being your residential address will find a match with the one on the defaulters list.
Your Credit Score is more important for a Personal Loan when compared to any other loan. This is because Personal Loan is a loan without collateral and your credit history is what the bank will look at before granting the loan. For more information, read this blog post - https://blog.bankbazaar.com/personal-loan-handbook-all-questions-answered/.
Paying off your Credit Card balance is one of the simplest ways to increase your Credit Score quickly. Your payment history makes up 35% of your Credit Score (that’s the biggest one!). Under this head, the way you use credit plays a major part. If you use minimal credit, then you get a high score. Credit Bureaus don’t bother about whether you have a high credit limit or a low one. They take into account how much of that credit you use. In other words, they are interested in your credit utilisation ratio. This ratio is the amount of credit you use when compared to the credit available to you.
For instance, if you have a credit limit of Rs. 75,000 and your Credit Card balance is Rs.40,000, your credit utilisation ratio will be 53%, which is considered high. Typically, experts recommend that you maintain a ratio of less than 25%. Now, if you can bring this down to zero, then your Credit Score will improve drastically. Even if you are unable to pay the entire balance, try and pay off at least 20-30% and your Credit Score is sure to improve immediately. Here’s a tip. Split up your Credit Card bill and pay it twice a month. That way credit bureaus will know that you have every intention of paying your Credit Card dues and your credit utilisation ratio also goes down.
Looking for a Personal Loan? Click here.