We all know how important loans are in today’s financial and economic sphere. When you take a loan , you are actually signing a contract where you agree to make a certain number of payments for a pre-decided amount of money that is to be paid by a pre-specified date every month. Credit score can be defined as belief or trust in your repaying capacity. Repaying capacity as in whether or not lenders believe you will be able to repay the debts. It thus means how well and how much on time do you pay your loans and other financial obligations.
What is a Credit score?
Credit score is a 3 digit numeric account that summarizes the entire credit behavior of a person. It has a variable range from 300 to 900 for a person. It is entirely dependent on credit history that is how fast and how efficiently have you repaid your loans. A good credit score means a greater reposement of faith in repayment abilities. It tends to be acquired from CIBIL on payment of nominal commission. It will basically be an assimilation of credit card bills, loan information and other finance related details.
Few factors while scoring your creditworthiness are:
- Payment history
- Number of credit accounts
- Credit mix
- Credit utilization ways and rate
- Negative financial information like bankruptcy
How Your Credit score impacts your loan?
The relationship between credit score and loan is very delicate. They affect each other and both impact the other equally.
- A good credit score will make lenders put faith in your application and this makes getting loans simpler.
- An appreciable credit history is thus very important for getting a loan sanctioned easily.
- A not so appreciable credit score may however partially thwart your chances of getting a loan sanctioned.
- One with a lower credit score may stand less chance of getting a loan sanctioned vice versa one with a good credit score.
Like this, there is equal effect on loans on credit score
- Timely loans raise credit scores
- High loan balances harm credit score
- Number of loan applications impacts your score
So a favorable credit scores is preferred under multiple categories to avail loans. Providers and lenders often consider a credit score as one of the primary components for giving a loan. Maintaining a good credit scores that displays your creditworthiness is thus almost pivotal to get a loan- be it a home loan or any other.
How can you improve your credit score to get a loan?
It is always important to improve credit scores and raise the creditworthiness in the market. Here are few ways one can do so
- Paying all bills and EMI’s well on time
- Full payment when necessary
- Keep a check on credit limits
- Keep a limit on number of times for a loan enquiry
- Track credit history and take timely updates
- Maintain a fair balance between loans-secured and unsecured
- Continuous monitoring of finances to remove errors
TachyLoans is an innovative, fintech company that provides easy loans in a transparent manner. The digital platform gives need based collateral free loans to users and students. It has multiple loan options for education, online training, salaried loans and skill development. They have their own internal credit evaluation model which can be considered while providing you a loan. TachyLoans can ask for supporting documents in order to be able to assess creditworthiness.
- Educational qualifications
- Salary slips
- Any additional information as per requirement