Why Do Banks Love To See The 750+ Mark On Your Credit Report?

When you apply for a loan of any kind, irrespective of your background or your ability to pay a lump-sum in your down payment, one important tool that helps the bank trust your ability and your intent to repay is a good credit score. Since the time credit bureaus have come into the picture, a credit report has become a financial bible for the banks.

A credit score is an aggregation of all your loans and credit cards. It reflects your creditworthiness and credit health. A score between 750 and 900 is the equivalent of an A/A+ on your school report card. It implies you’ve been very responsible with your credit, paying your EMIs and dues on time and in full each month. Even if you had a low score at one point, you’ve worked hard over time to reclaim a top spot on the credit score charts. In short, you’re very mindful and responsible when it comes to credit.

Your score also reveals that you’re a relatively safe bet when it comes to borrowing money from a lender or availing credit card facilities. According to credit bureaus, the lowest interest rates tend to go to borrowers with credit scores in the 750-900 range, which means your high score will also help you save money down the road. Besides these advantages, a 750 above score is also loved by banks. Below are the some of the reasons:

1. Judging your reliability becomes easier: The credit bureaus like CRIF are RBI regulated and for scoring an individual they employ sophisticated statistical analysis of your repayment performance on loans and credit cards listed in the credit report. A credit score takes into account many parameters, and helps bank predict future riskiness of a customer. The credit score thus becomes one of the major criteria for the bank.

2. Saves the bank a lot of time: The credit score is a sum of your loan repayment behavior so the bank saves a lot of time in analyzing how your credit behavior is or your ability to repay. The loan sanctioning process is simplified and is a lot faster. As a customer, you get your loan decisions fairly quickly.

3. Accuracy is on point: Initially, the traditional ways were adopted to verify an individual’s credibility which differed as the process depended on varied sources thus making the results volatile in nature. Since the time credit bureaus like CRIF have come into the financial world, the decisions have become more objective, data driven and also standardized. Therefore, the accuracy of the decisions have improved and also more dependable.

A good credit score is the magic wand that does the trick on banks when you apply for your loan to fulfil the most awaited dreams. The banks come across thousands of application for loans and the credit score helps them accept or reject applications in a more organized way and also quite quickly. A bad credit score can make you a risky bet while a strong credit score is encouraging to banks, ensuring you get the best deals out there, which saves you time, money and worry.

What’s In Your Credit Score?- An Infographic

Check out our infographic to know what affects your credit score and how your actions could improve or hurt your creditworthiness. While various credit scoring models may weigh each factor differently, we’ve listed out the most important ones for you.

4 Proven Hacks to Build a Great Credit Score

Building a good credit score is very similar to building a good reputation; both require an immense amount of work and patience. Loans are a crucial part of the modern man’s life and building a rock-solid credit history is of paramount importance for getting a big loan approved. If you are successful in maintaining a high credit score your quality of life will take a 180-degree turn as you will be able to buy all the luxuries in the world for yourself and your family.

But the sad part of the story is that your scores can drop real quick for the smallest of the reasons. It can be disheartening to know that you have a low score when you open your credit report. But hey, do not be discouraged, you can still work things out! Wondering how? Look no further, we have compiled a list of 4 things you can do to build a great credit score.

Repay your card dues and EMIs in time:
Yes, however stereotypical this suggestion sounds it is actually true. Every credit risk analytics expert swears by this strategy. A consistent regular repayment on your card dues and EMIs will definitely help you with a good credit score. If you become delinquent and default on your loans, your credit score will be negatively impacted because the lender will report that you are not in compliance with the terms of your loans. Even if you missed a payment, do not sulk in worry. Get up and bring your loan to regularity now.

Utilize your card with caution Don’t use the card to its full capacity:
Having a credit card is not your ticket to go overboard on shopping! Things can take a detour and you may soon find yourself in a pool of debt. Using the card to its full capacity is never the right thing to do. Try spending only up to 40% of your credit limit to keep the balance low it will help you repay the full amount on the due date and also keep your credit score in low.

Limit your credit card applications or loan:
Too many credit inquiries on your profile by banks ‘whether they be for a credit card or a loan’ also can also bring down your score, so make sure you’re only applying for credit only when it really is necessary. Select a credit card and a bank after doing research rather than blindly applying for credit with many banks.

Checking your Credit Score regularly:
Don’t lose the good credit score you’ve worked for! Now’s definitely a good time to ask yourself if you’re being proactive about protecting your financial health. Management guru Peter Drucker said that you can’t manage what you can’t measure. To manage over your credit and your financial life, you must measure your creditworthiness through the credit score regularly. Tracking your credit score every quarter helps you stay on top of your own credit report and thus, maintain a good credit score.

So there you have it, all you need to do is blend these simple steps together and make a great recipe for a good credit score! If you still feel uncertain about how to build and maintain your credit score, you can read our BLOG or feel free to get in touch with us!