Credit scores have been getting more and more important in all parts of people’s financial lives for more than a decade. This financial asset is one of the first and most important ways that lenders look at loan applications. It is also used to figure out the interest rates for personal loans. So, having a high credit score is, without a doubt, a valuable financial asset in the modern world, especially for unsecured loans like personal loans, where lenders are more likely to lose money.
Also, everyone will need a personal loan at some point in their financial lives because they are easy to get, don’t require security or collateral, have the IDFC first loan status facility and can be used for anything.
So, here are some money habits that can help you be financially ready to take out a loan when you need to:
Think carefully before you co-sign
This is because taking on this obligation affects your own credit score as well as the credit score of the main borrower. Even if the joint holder or guarantor got low personal loan Interest rates because of their carelessness, it could hurt your credit score for a loan or any other credit you might need in the near future. This is because you are ultimately responsible for making up for the missed payments and mistakes that happened. Before you say yes and sign the loan papers, make sure to carefully read and think about what he or she said. And even after you have said yes, ensure to check IDFC first loan status from time to time for updates.
Get in the habit of paying your loan and credit card bills on time
Your payment history makes up about 30% of the factors that go into figuring out your credit score, and it is shown whenever you check your credit score. Credit bureaus will look at your credit history very carefully to see if you’ve been a good borrower.
So, it’s important to keep in mind that making regular and on-time payments on your loan EMIs at the applicable IDFC Personal loan rates is important. Rates of interest have a positive effect on your credit history and increase your chances of getting a good credit score and a loan quickly and easily when you need one. Any difference or missed payment in your payment history can lower your credit score. If you don’t have a good enough credit score for a loan, your application could be denied, or you could be given the loan at a higher interest rate than you would be eligible for otherwise. You can check approval or rejection of a loan through IDFC first loan status facility.
Don’t spend more than 30% of your credit card’s total limit.
If you want to keep a good image in the eyes of credit reporting agencies, you should keep your credit utilisation ratio low, ideally around or below 30%. Higher credit utilisation shows a need for more credit, which hurts the credit score calculation. If you often use more than 30 percent of your current credit limit, you might want to get a new credit card or ask for a higher limit on the one you already have to lower your debt-to-income ratio.
Avoid too many direct loan or card enquiries.
Direct loan inquiries to banks and other financial institutions in order to get credit will probably hurt your credit score, especially if your score is already low. Don’t ask directly for loans.
If you need a personal loan and have a good enough credit score for one, you shouldn’t make new loan inquiries or applications directly to too many lenders. This can hurt your credit score because all of this activity is recorded on your credit report.
So, instead of sending multiple applications to different lenders to get the right EMI amount, it’s better to use the EMI Calculator to find the right EMI amount based on the loan amount you need, the interest rate you expect, and the length of time you want to borrow the money for.
Keep in mind that sending a lot of loan and credit card applications to lenders at once and applying for credit often can hurt your credit records. This is because if you use these applications to ask for credit over and over, especially in a short amount of time, it shows that you are hungry for credit and more likely to not pay it back in the future.
Also, lenders may charge you higher interest rates than they would charge other borrowers because they know you need credit desperately. Amidst all this, just like you check your credit score/report, you can also get an update on IDFC first loan status through the website to know updates about your loan application.
Have a good credit history
You can’t figure out your credit score if you don’t have any credit history. Your credit history is what lenders will look at to decide whether or not to give you a loan. If you don’t have a good credit score and profile, they may still give you a loan but at a higher interest rate. It becomes even more important to keep a good credit score by building and keeping up a good credit repayment history that you can show to lenders when you apply for a personal loan. Checking your credit score is free in many ways, such as once a year from credit bureaus and once a month from many online financial sites.
Keep your credit mix balanced.
When you pay your EMI, keep in mind that having a healthy mix of credit is also important.
A person’s credit portfolio should have a higher percentage of secured loans than unsecured loans. If you have a lot of unsecured credit on your credit report, lenders may not think your credit is great. This is because lenders prefer people with a higher percentage of secured loans in their credit portfolio. Because of this, credit bureaus tend to give such borrowers good scores.
