Applying for bank, other loans? Here is what you must know about credit score
The credit score of a person reflects one's credit history, which is decided by the financial transactions done by the person.
Credit score plays an important role in the approval or rejection of a bank application towards a home loan, personal loan, etc. According to tax and investment experts, by the time loan applicants application gets logged with any bank, the lender starts finding out the banking history of the loan applicant. In this process, one's credit score becomes so important that the approval or rejection of the loan application depends on it. Therefore, it becomes important for a person to know how to improve one's credit score and what are the mistakes that a common man commits that hits one's credit score.
Speaking on the credit score Gourav Mashruwala, a certified financial planner said, "Credit score of a person reflects one's credit history, which is decided by the financial transactions done by the person." He said that credit score is calculated by a CIBIL rating agency that looks at each and every banking transaction and its history of the loan applicant. "Credit score ranges from 300 to 900 and more closer to the 900 credit score is, more chances of approval of the bank loan is."
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Highlighting on how does the credit score gets hit Jitendra Solanki, a SEBI registered tax and investment expert said, "If someone has taken any loan and there is no EMI default or delay in EMI payments, then there are chances of a person having a higher credit score. A credit score of above 750 is considered satisfactory for approving a bank loan for any bank in India. However, a credit score of above 800 helps a bank customer bargain with the bank on the interest rate of the loan. A loan applicant with a higher credit score can bargain with the bank on the interest rate, in case, the bank has offered a higher interest rate on the approved loan. But, generally, banks offer lower interest rate to the loan applicant whose credit score is above 800."Solanki said that your credit card use also decides your credit score. If you have an active credit card and you are not using that, then it's better to hotlist that credit card as no use of the credit card may affect one's credit score.