Askinz finance and mortgage
As an individual requiring access to credit and loans for your business or personal needs, it is important to understand that your credit score health assumes great importance in getting you the finance you require quickly and without many hassles. Having a great credit score will get you loans at affordable rates of interest when you need it and you might not have to sell precious company stocks or place any asset on mortgage in order to raise money.
However let us first understand the basics of credit score and then what you can do to keep it high.
The credit or FICO score is a figure that is calculated through a mathematical and statistical model. This number ranges from 300 to 850 and essentially informs the potential lender about the individual’s probability of paying back the sanctioned loan on time. A credit score of over 700 is a good one and you will not only be wooed by lenders for any loans you wish to take but they will also offer you a good rate of interest. Similarly a credit score below 450 may disqualify you from any loan and if somebody does extend a loan to you, it will usually be at high interest rates.
So how do you ensure that your credit score is high and stays that way? Here are some suggestions.
a) Ensure prompt payments
This advice on the face of it appears very simple and straightforward but is the most difficult thing to do and any delay in the repayment schedule can drastically impact your credit score. Most of us do tend to sometimes forget or ignore some small repayments and end up spoiling our credit score. Since about 35% of the score is dependent on how prompt you are with your repayments, ensure you always pay on time with special emphasis on clearing all recent outstanding.
b) Do not pile up credit card balances
Credit card debt is one of the most common liabilities that negatively impacts credit score. If you have used up all your credit cards and all of them have balances to be settled, your credit score will take a huge hit. So make sure that you use only one or two cards and keep balances at below 25% of the allowed credit limit if you cannot settle outstanding in full each time.
c) Do not terminate settled accounts
It is not prudent to terminate the accounts you have already settled as that will shorten your credit history which in turn will impact your credit score negatively. Terminating old accounts alters the utilization ratio and that will make you appear less credit worthy than you actually are.
d) Start small
It is better to take a small loan in the beginning, pay it off in time so that you establish a good track record. Acquiring debt and settling it on time goes a long way in propping up your credit score. It is only by showing lenders about your capability to raise debt and settle on time that you can get more loans at good rates of interest.
The above are some of the techniques you can use to keep your credit score high. Do visit blogs like the Askinz Finance and Mortgage one to get more such ideas.