Credit Score: What you should never do to ruin this crucial metric

A batsman is as good as his last score. You cannot fault a banker if he tweaks it to say “Any loan applicant is as good as his current credit score”. In fact, the credit score is the first parameter that any lending institution – bank or NBFC – turns to before sanctioning/discarding a loan application.

All loans – home loan, personal loan, car loan and even student loan – is critically dependent on the credit score of the applicant. In order to ensure smooth passage of the loan application, one should ensure a credit score of at least 700. However, a credit score can be easily ruined – pulled down, that is – by small acts of carelessness. You should know what these are to avoid them at all costs.

Never miss EMIs

You should never miss your EMI (equated monthly instalment). Missing an EMI immediately impacts your credit score adversely. If you run short of cash, ask for help from friends or relatives to pay EMI within the due date. Since many take loans from banks/NBFCs nowadays, one needs to guard against it carefully.

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Don’t exceeding credit limit

If you use a credit card and regularly exceed your credit limit, it will be deemed as financially irresponsible. It can depress the credit score.

Never leave dues unpaid

If you have taken any loan from any lending institution, always remember to extinguish it fully and within the agreed repayment tenure. If you pay only a part of it and leave the rest unpaid – no matter how small – it will ruin your credit score and your applications for loans will not be entertained.

However, it you detect any error on the part of a credit bureau, you should get in touch with them and get it rectified. Such requests can be raised online. Also remember in today’s networked world, any act of financial misdemeanour cannot be kept a secret.

Know the credit rating scale

Any credit score above 750 till 799 is regarded as “good”. The score is assessed against a scale of 900 and anything above 800 is considered “excellent”. Score between 701 and 749 is “fair” while anything below 700 is “low”.