We are living in times, where some of our needs and wants supersede our earning capacity. Quite often we find ourselves in the requirement of a loan to fulfill our needs and wants. One of the main factors which determine your loan acceptance is your Credit score. So how exactly you maintain a good credit score and how it proves your credit worthiness?

To get best interest loans in India click here

Here we are going to tell you how your credit score proves your credit worthiness.

Credit Report: While understanding how your credit score works you need to understand your Credit Report. If you have an impressive credit report then, there are more chances of you having a good credit report and lower the credit report, lower your credit score is. Low credit score means that you will have difficulty in getting a loan.

Payment history: The biggest factor in determining your credit worthiness is the history of your past payments. More focus is on your past payments which are related to your EMIs and credit card bills. Basically what you need to understand is that in the past if you have made a timely payment of all your dues, then you won’t have any trouble proving your credit worthiness. However, if it is the other way round, you will have an uphill task proving your future creditor about your financial health.  All this will be reflected in your credit score, so be careful and make sure you have made all your payments on time.

Duration of credit history: The lender will also take into consideration the duration of your credit history. It is better if you have a long credit history and the fact that it is not dotted with financial shortcomings. If you are ticking these two boxes, then you will surely get a loan, with an interest which suits you the best.

Opening of new bank accounts: Opening a new bank account will reflect on your credit score. However, if you open multiple bank accounts in a short span of time, then your financials will be strained, and this will be seen as an adverse condition by the lenders, and it will also reflect on your credit report. This will lower your credit score. Always remember that whenever you open a new account, an inquiry will be made into your credit score. Hence opening new bank accounts in a short span of time should be avoided.

Healthy Credit mix: This might not seem to be important, but if you have a healthy credit mix, it will be a good reflection of your credit history and will work in your favour. Mixing up your credit shows that you have the ability to pay off your debts, be it any kind; provided you have managed all your credit well with financial stability.

These are the methods how your credit score proves your credit worthiness. Although different banks have different standards when it comes to taking your score into consideration, an ideal score in most cases is 750 or above. The credit score ranges from 300 to 900.

The post How credit score proves your credit worthiness appeared first on MakeMyMoney.