Are you facing loan rejection? This is very frustrating, especially when you are in need of funds. When emergencies combine with financial crises, the situation becomes a horrific one. One reason for rejection is a low credit score. If you find your loan application has been rejected, it is probably because you have a bad credit score. To check credit score is the most important thing in meeting the eligibility criteria. Every financial institution has their own eligibility criteria, keeping credit score as a prominent one. It is time to improve your credit score. Instead of applying for multiple loans, try and work out on your credit score improvement. The improvement will not happen overnight and it takes a lot of time. There are various steps and habits that can improve your credit score. A credit report is responsible for approval and rejection. To improve your score and open financial opportunities in the future, take the following steps. These measures will help you to improve your score. A good score has huge perks and benefits that can be very effective while borrowing.
What is a credit score?
A credit score is a score that represents the entire credit journey of an individual. It takes into account all the credit activities and behavior of an individual from the past to the present. A good credit report means a borrower has handled his credit in a good manner. He has made timely payments, conducted debt repayment on time and not overused the credit limit of credit accounts. On the other hand, a bad credit journey represents a bad credit report. A loan provider or a financial institution takes the help of a credit score to undermine the credit health and condition of a borrower. It should be a good score if one aims to open up borrowing opportunities in the near future. This will be helpful and a good credit score comes with huge benefits and perks. Leave back rejections with a perfect score. Follow the below listed measures.
Measures to improve your credit score
● Make timely payments: A good credit score comes with good credit habits. One such habit is paying bills on time. It is important to make on-time payments so that you can maintain your score. A good score convinces the financial institutions to have an easy and smooth approval process. The EMI or any bill should be paid by the due date and not after the due date. Paying after the due date will harm your credit score and present a bad credit history. Start working on automated payment options so that you can ignore rejection.
●Do not apply for multiple loans: When a borrower faces rejection, the next action should be improvement. One should not keep borrowing and applying for multiple loan options. By applying multiple times, there will be a hard enquiry run on your score every time. This will damage your score further. It will not have any positive impact and you will make your credit worse. Make sure you do not apply for any further loans after rejection.
●Pay full bill amount: A bill has two parts-minimum amount and full amount. While a minimum bill amount may look easy initially, in the long-term it will be expensive. When you keep an outstanding amount by paying just the minimum amount, you will be charged extra fees and charges. This will also hamper your credit score. Stop paying minimum bills and start paying the entire bill for the particular month.
●Do not overutilize credit limit: A credit account comes with a particular credit limit. Do not use the credit limit completely. When you exhaust the entire available credit limit, you affect your score without even knowing it. Always pay your bills for the month so that you get back the available credit limit. This will help you with a good score as well as you can use it for future uses. Learn How to calculate business loans by using a business loan calculator.
● Don’t use too many credit cards. A credit card is a very expensive form of debt. One should not use too many credit cards. It is very easy to use and very flexible. However, the pre-approved credit limit leads to wastage. High credit card bills become a burden and you end up missing out on payments, thereby damaging your credit score. Keep one credit card and use it only when you do not have funds.
●Let your credit account age: A long credit age is a good one for your credit score improvement. If you are aiming to get a good score, you need to keep your credit account open. Do not close it even when you do not use it. This will not be feasible and you will end up losing your score.
Finishing up
Consider checking your credit score every now and then to stay updated. A good credit report helps you to borrow and be open to financial products at the time of need. An excellent credit score makes it easy to get approval and disbursement.