Women are often told what to do and what not to do to become financially independent. From savings and investments to borrowing, a lot of advice is given.
But what about credit score! It is crucial for boosting your approval chances for loans like home loans, personal loan, car loan etc.
So here are smart ways for women to raise their credit scores.
Make sure that payments on loans and credit card bills are made regularly and on time.
The history of your payments toward your debts is one of the factors that credit bureaus look at when determining your credit score for personal loan; this helps them understand how you handle your financial obligations. Repaying debt requires not only the payment of your loan’s instalments (also known as EMIs) but also payments made to your credit card companies. If you currently have a low credit score, timely repayment of your outstanding credit card dues and loan EMIs can most certainly assist in progressively increasing it. This is especially true if you have a history of defaulting on your financial obligations.
Your credit score for a home loan can be slowly improved without any interest charges if you make responsible use of credit cards for day-to-day purchases and then pay off the balance of your credit card bills on time and in full every month. If you fail on a payment, are late with a payment, or miss a payment entirely, the lender will report this information to the credit bureaus, which will result in a decrease in your credit score. Therefore, paying back all debts in a timely manner while maintaining consistency would gradually and steadily lead to an improvement in credit score.
Avoid repeated direct applications for loans or credit cards.
Before deciding whether or not to grant your credit application, the lender will always pull your credit report from the bureaus that maintain your credit history before deciding whether or not to approve your credit request. These kinds of lender-initiated credit searches for your credit report are known as hard enquiries; if you have too many of these queries in a short period of time, it will give the impression that you are someone who is often looking for new credit, which will lower or damage your credit score for home loan. In addition, creditors could forget to inform the credit bureaus about account closures or repayments that you have made, which would result in a debt that has been paid off being reported as being unpaid even if it has been paid off.
Do not go to the lenders directly, even if you are in desperate need of credit (a loan) or are considering making responsible use of a credit card in order to raise your credit score for a personal loan. Consider going to online financial websites/portals because they provide you with the opportunity to retrieve your credit score and report for free, in addition to providing you with updates on a monthly basis. In addition, credit inquiries that are made through these platforms are regarded as soft enquiries, which do not have a negative impact on your credit report or score.
You should check your credit score and report for inconsistencies on a regular basis.
Because there are currently four credit bureaus operating in our country, and each of these bureaus is entitled to provide one free credit report in a year, consumers have access to at least one free credit report every three months of the year. Consumers also have the option of visiting online financial portals to obtain such services, where they will be provided with a free credit score for personal loan and credit reports, in addition to receiving updates on a monthly basis. If you do not regularly check your credit score for home loan and reports, it is possible that an error on the part of the lender or the credit bureau, or even the possibility of identity theft, will go unnoticed, which will damage your credit score and, as a result, reduce the likelihood that your next credit application will be approved.
Reduce credit card spending to below 30% of the limit
The term “credit usage ratio” refers to the proportion of the total outstanding credit card debt amount in comparison to the total credit limit that is available. This ratio simply indicates the proportion or percentage of your total credit card limit that you have utilised. By making use of a greater percentage of their available credit, many borrowers ultimately hurt their credit score for personal loan. It is possible for working women, who are often responsible for managing both their personal and household spending, to wind up with a higher credit utilisation ratio. This is especially true for women who are the primary breadwinners in their households. Because a higher credit utilisation ratio is seen as a sign of credit-hungriness by credit bureaus, and because the likelihood of future defaulting on credit card payments is higher in such cases compared to individuals who have been managing their credit cards responsibly, credit bureaus frequently lower the credit score for home loan of individuals who fit this description.
If you consistently use more than 30–40 percent of your available credit, you should ask the company that issued your credit card to raise your credit limit or look into getting another credit card. This will help you bring your overall credit utilisation ratio down.
Keep an eye on the guaranteed loans.
If you opt to become a guarantor, jointly borrow money, or co-sign a loan in order to assist another person in having their loan application approved, you are taking on equal responsibility for the debt that is incurred as a result of that borrowing. In the event that the principal applicant fails to make a payment or otherwise defaults on the loan, your credit record will also be negatively impacted, along with the credit report of the defaulter. Therefore, if you see a drop in your credit score for home loan, one of the first things you should do is review the accounts for which you have guaranteed a loan. If necessary, support the primary borrower in timely repaying the loan, as this would increase both your credit score for personal loan and the original borrower’s credit score, as well as prevent any further declines.
