What is it that you are looking out for? It can be a medical emergency or a home renovation that you are considering a loan for. To start with, you need a good credit score. A credit score is the first factor that is considered by every loan provider. It represents your credit background and debt repayment history in a detailed manner. If you are wondering if your credit score is good enough or not, you need to understand the range and eligibility criteria set by the loan provider. In general, a score of 750 and more is always the best way to get any loan without any restriction. Check your credit score online to know your score and work on it if needed.
The key range of credit score
300-549: If you have a credit score within this range, it is not at all a good one. There are high chances that your loan request will not be approved but rejected straightaway. Even if you have approval somehow, there will be restrictions and high charges as it signifies a lack of reliability. This score indicates risk and you need to work on it. Check credit score using the free websites to keep yourself updated about the improvement.
550-649: A credit score in this range is considered to be an average score. If you wish to attain approval on sizable loan requests with lesser restrictions, then measures need to be taken to ensure the same.
650-749: This range of credit scores is a good one. You should experience little to no problems at all while you are trying to get a loan.
750-900: A credit score of 750 and more is taken as an excellent credit score. This gives you the ball in the court. This will never give you a rejection, and approval along with other perks are available. This will help you negotiate for a better rate of interest and low restrictions at any point in time.
Ways to improve your credit score
Make timely payments: Paying your bills on time is a financial discipline that one needs to execute. There is a due date for every bill payment, and you need to make the payment within that due date and not after the date. Payments are a very crucial part of a credit score that makes a huge difference. For every last or default payment, you end up losing points from your score. Once you start losing out on your credit score, your opportunities for borrowing gets limited. It becomes very difficult to handle your emergencies and dreams without a loan. Always focus on keeping your payment on time and within the due date. To avoid any delay, you can surely automate your payment options so that the amount gets debited from your account without your notice.
Make full payment: A bill has two components, like minimum payment and full payment. One needs to make the full payment and not choose the minimum bill. If you pay the minimum amount, this will be harmful to your credit score as well as finances. You end up paying an extra interest amount for paying the minimum balance amount. It is important for you to consider the full bill payments and never the minimum due amount.
Do not close credit accounts: You may have various credit accounts that you do not use. Make sure you are not closing the account suddenly. Remember longer the credit age, the better will be the credit record. Do not close any account and increase the credit age.
Do not apply for multiple loans: If you find rejection in the very first loan application, do not keep applying. It is very common for you to keep finding different options and keep applying. This will do you more wrong and you cannot afford to do this. It will signify a red signal and you will not be getting approval under any circumstances. The more you apply for a loan, every time the hard enquiry on your credit record will low down your score. This is the worst way of losing out a good credit score by applying multiple times.
Loan repayment: It is important to secure your debt in the right way. Take care of loan repayment till the tenure ends. You need to make your repayment within time and there should be no hindrance on it. Make sure you consider repaying your loan over any other expense.
Check credit report: Check credit score and report on a daily basis as you may find any error that is responsible for a bad credit score. Ensure that your report is not having any error that can be negative for your credit score. If you find any, report it immediately.