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Why is credit score so important

by Soft2share.com

The credit score is a crucial thing related to any credit instrument, including credit cards. Different companies compute credit scores globally, which is essential to determine the worthiness of a user. In India, CIBIL regulates and computes the credit score for all users. This agency works according to the guidelines of the RBI.

It takes a lot of time to build a good credit score. A user needs to maintain a healthy financial history to elevate his credit score gradually. Here are some primary reasons why the credit score is considered important for all credit card users.

Credit Score

Good Credit Score Allows to Get Loans

Banks and NBFCs extend loans to customers on the basis of their credit score. If your credit score is poor, you might not get the desired capital. Moreover, some banks only give loans to people having a good score. On having a medium cibil score, you can still get a loan, but the rate of monthly interest can be hefty.

Taking a Premium Credit Card

Premium credit cards allow users to enjoy several conveniences. The annual fee for owning this card is waived in most of the cases. Furthermore, the top-ranking cards also allow you to enjoy multiple rewards. The bank issuing these premium credit cards check if the user has a decent credit score or not. If you have a poor or medium score, the chances of getting a premium credit card can diminish. 

To Get Lower Insurance Premiums

On having a good credit score, you can deliver a lesser amount of insurance premiums. However, you can check if the insurer considers your cibil score to determine the amount of premium you will have to pay.

Easier Placements in Jobs

There are different cities in India where top MNCs operate. When you visit for an interview in an MNC as an experienced professional, the company might ask for your credit details. These MNCs observe your habits of expenses and financial management ability, which is duly reflected by your cibil score. A good  score ensures a higher chance of getting the job.

Ways to Elevate Credit Score

There are a few lucid strategies that you can take to improve your credit score while using a credit card. They are given below:

On-time Balance Clearance

No matter how much outstanding balance you have in your credit card, you must clear it on time. If possible, you can also pay the outstanding amount to the credit card issuer before the deadline. This helps in the improvement of your credit rating.

Take Minimum Loans

To improve your credit score, you must maintain a balance between your income and expenses. As a result, you will hardly need to take any loans. Take loans only when needed as multiple loans taken simultaneously or when you already have an open loan account, will translate into poor credit management. Make sure you always avoid the instances where your credit scores can fall drastically.  

You should be aware of the different levels of score. It is measured from 300 to 900. A credit score above 750 is adequate, whereas above 500 is considered medium. While using a credit card or taking a loan, you must dedicate learn how to balance your expenses and repay the debts. Keeping the suggestions in mind will help you to maintain a sterling credit history and subsequently build a good score.

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