Your credit score plays a crucial role in achieving financial goals like buying a house or a car. It represents your creditworthiness in a numerical format ranging from 300 to 900. The higher your credit score, the better your chances of getting quicker loan approvals and securing better interest deals.
At Shriram Finance, we understand the importance of credit scores in fulfilling your dreams. That's why we offer a range of credit solutions including loans for commercial vehicles, two-wheelers, cars, homes, gold, personal finances, and small businesses. These credit solutions can help you improve your credit score. In addition to that, we also provide fixed deposits and recurring deposits to help you grow your savings.
How to Utilise Your Credit Score
Having a high credit score opens up numerous opportunities to achieve your financial aspirations. A good credit score enables you to obtain quicker loan approvals, higher credit limits, discounted interest rates, and eligibility for loans and credit cards. Let's delve deeper into how you can utilise your credit score effectively.
How Does Your Credit Score Impact You?
1. Lenders and Credit Card Issuers
Banks and non-banking finance companies (NBFCs) rely on the credit score model to assess an individual's creditworthiness when approving loans or issuing credit cards. They evaluate factors like past and present payments, repayment behaviour, and credit history from major credit bureaus. A high credit score of 750 and above positions you for preferential pricing on loan interest rates from lenders. This means you can secure loans at more affordable rates compared to individuals with lower scores.
For instance, let's consider Ramesh. He has a good credit score of 800. He applied for an auto loan at Shriram Finance. Due to his high credit score indicating responsible financial behaviour, Ramesh receives quicker loan approval and enjoys lower interest rates compared to someone with a lower score.
2. Landlords
In India, how do lenders use credit scores landlords are gradually adopting the practice of checking credit reports before renting out their properties. They do so to ensure potential tenants have the financial capability to pay rent on time. While this practice is still in its nascent stage, it may become more common in the future. Thus, it is essential to work towards improving your credit score to increase your chances of securing a rental property.
3. Employers
Some employers may request permission to check an applicant's credit score as part of their hiring process. Although this practice is not widespread in India, it highlights the significance of maintaining a good credit score. A high credit score reflects financial responsibility and can contribute positively to your employability.
Tips to Improve Your Credit Score
Improving your credit score requires adopting certain financial habits and practices. Here are some useful tips that can help you enhance your creditworthiness:
- Payment history: Pay bills on time to avoid negative impacts on your credit score. Set reminders or automate payments to ensure timely payments and avoid missed or delayed payments.
- Credit exposure: Maintain up to 30% of your total available credit limit across different accounts. This demonstrates responsible usage and shows lenders that you can handle credit responsibly.
- Credit type and duration: Maintain a good balance of credit mix with revolving accounts (credit cards) and instalment accounts (loans). Avoid closing old credit cards as they contribute to a lengthy credit history, positively impacting your credit score.
- Other factors: Regularly monitor your credit reports for errors or discrepancies that could impact your credit score negatively. Check your credit score periodically through reliable sources to stay updated on changes and track improvements over time.
Key Highlights:
- A high credit score facilitates quicker loan approvals.
- It allows for higher credit limits and access to better rewards and benefits with credit cards.
- People with higher scores can negotiate discounted interest rates.
- Waivers from fees and charges can be requested by individuals with good scores.
- Having a high credit score increases eligibility for loans and credit cards.
Conclusion
A high credit score paves the way for achieving financial goals efficiently. It leads to quicker loan approvals, higher credit limits, discounted interest rates, fee waivers, and increased eligibility for loans and credit cards. By following the tips mentioned above, you can improve your credit score and leverage the benefits it offers. At Shriram Finance, we understand the significance of credit scores in financial success and provide various credit solutions tailored to meet needs.
Whether you require loans for commercial vehicles, two-wheelers, cars, homes, gold, personal finances, or small businesses, we have you covered. We also offer fixed deposits and recurring deposits to help you grow your savings while ensuring financial stability. Start utilising your credit score effectively today and make your dreams a reality with Shriram Finance.
