RESUME APPLICATION PAY PREMIUM
Fund Performance

Fund Performance

Knowledge Center

Knowledge Center

About Us

About Us

Tools and Calculators

Tools & Calculators

Quick links

Mobile (Download app)
  • Webpages
  • Documents
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment

For NRI Customers

(To Buy a Policy)

(If you're our existing customer)

For Online Policy Purchase

(New and Ongoing Applications)

Branch Locator

For Existing Customers

(Issued Policy)

Fund Performance Check

RESUME APPLICATION PAY PREMIUM

What do you want to do?

Quick links

Mobile (Download app)

Download HDFC Life App

Buy plans, track your policy, make renewal payments & monitor fund performance with HDFC Life App, Download Now!

Apple Logo Go to Google Play Store

How to improve your credit score?

down-arrow
How to improve your credit score
March 21, 2024

Table of Content

 

Your credit score functions as a report card for your financial health. When it's in excellent condition, it acts as your golden ticket, making it easy to secure credit cards and loans. However, if your credit score isn't in its prime shape, it can create hurdles on your path to swift credit solutions. In fact, a survey carried out by the credit health improvement company revealed that an astonishing 92% of the participants were unaware of their credit scores.

In this article, we will delve into the significance of your credit score, discuss options for monitoring it, and offer you actionable strategies to boost your creditworthiness.

Why is your credit score important?

In today's financial landscape, recognising the importance of your credit score is a key element. There are numerous banks and lending institutions in India but securing a loan is not always a smooth journey.  To mitigate lending risks, financial organisations use specific criteria to assess an individual's or business entity's ability to repay. This is where your credit score becomes pivotal, serving as the most influential factor in loan approvals.  Your credit score essentially acts as your first impression to potential lenders. A solid credit score not only improves your chances of loan approval but also secures more favourable interest rates from lenders.

How does your credit score affect your insurance?

A person's creditworthiness is often assessed by financial institutions using various metrics, including their credit history and credit score. A high credit score typically indicates responsible financial behavior, such as timely payment of bills and debts, and maintaining a low level of outstanding debt relative to their available credit. Financial institutions use this information to evaluate the risk associated with lending money or providing insurance to an individual. Those with higher credit scores are generally considered lower risk, as they are more likely to repay their debts on time. As a result, they may be offered better terms and conditions on loans or insurance policies, such as lower interest rates or premiums. Conversely, individuals with lower credit scores may be viewed as higher risk, as they may have a history of late payments or defaulting on debts. They may face higher interest rates or premiums, or may even be denied coverage or loans altogether.

How to check your credit score

Regularly checking your credit score is a smart practice to gauge your financial health. A credit report includes your credit score and a detailed history of your credit transactions, which you can obtain from trusted credit agencies such as Equifax, CIBIL, Experian, and CRIF High Mark. This report highlights any instances of delayed payments on loans or credit cards, potentially causing a lower credit score. If you identify any errors in the report, you can report them to the credit agency and your lenders for resolution.

Best strategies for improving your credit score

Follow these best strategies on how to improve your credit score and secure credit facilities for your future financial needs:

  • Timely loan EMI payments

    • Missing loan EMI payments can result in penalties and a significant credit score drop. To ensure punctual payments, set reminders or establish Standing Instructions (SI) with your bank, which deducts fixed amounts at regular intervals, usually on a monthly basis. These proactive measures can help you stay disciplined and prevent payment delays, thereby preserving and potentially enhancing your creditworthiness.

  • Clear credit card dues promptly

    • Strategically plan to pay off your credit card balances by the due date to maintain a healthy credit score. Failure to do so can affect your credit score, with late payments reflected in the Days Past Due (DPD) section of your credit report. To mitigate this, make it a point to clear at least the minimum amount due, which helps prevent negative reporting to credit bureaus. This step not only avoids immediate credit score damage but also provides you with an additional billing cycle to settle your dues and safeguard your credit score from further decline.

  • Review your credit report for errors

    • It's essential to carefully scrutinise your credit report for inaccuracies, which can include incorrect personal information, account details, discrepancies in overdue or paid-off amounts, and other errors. Should you come across any such discrepancies, file a grievance with CIBIL online to rectify these inaccuracies. This proactive approach can lead to a potential increase in your credit score, as the accuracy of your credit report is crucial to maintaining a robust credit profile.

  • Limit credit applications

    • Applying for many credits in a short time­ might tell lenders you have money problems. This could make the­m think you're more likely to not pay the­m back. To stop this, you should do good research, look at all your choices and apply to just one lender when you need to. This approach not only safeguards your credit score from the negative impacts of excessive hard inquiries but also demonstrates prudent financial decision-making.

  • Monitor co-signed or guaranteed loan accounts

    • If you've co-signed or guaranteed a loan for someone, it's crucial to stay vigilant and regularly monitor the loan's repayments. If they're late or skip payments, both your credit scores may drop. So, stay informed about the loan status, communicate with the primary borrower if any issues arise, and protect your creditworthiness.

Conclusion

In conclusion, credit score plays an important role in your financial life. With careful monitoring and implementation of the tips from this article, boosting your credit score shouldn't be too difficult. Doing so will not only expand your credit options, but also fortify your financial future. 

Consider adding a savings plan to your financial strategy as you work towards bettering your credit score. With unexpected expenses always on the horizon, saving can help you feel more secure alongside having a healthy credit profile. Including an emergency fund, retirement savings, and investments can help put you on track to achieving your financial goals.

Source: https://economictimes.indiatimes.com/analysis/smart-ways-to-improve-your-credit-rating/articleshow/24198588.cms?from=mdr

Related Articles

ARN: INT/ED/03/24/9749

Term Plan Articles Term Plan Articles

Investment Articles Investment Articles

Savings Articles Savings Articles

Life Insurance Articles Life Insurance Articles

Tax Articles Tax Articles

Retirement Articles Retirement Articles

ULIP Articles ULIP Articles

Health Plans Articles Health Plans Articles

Child Plans Articles Child Plans Articles

Popular Calculators Popular Calculators

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

LinkedIn profile
Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

LinkedIn profile
Reviewed By Reviewed By:

Here's all you should know about life insurance.

We help you to make informed insurance decisions for a lifetime.

Preserving Your Investment: How New Tax Rules Affect Real Estate Sales Before 2024

Preserving Your Investment: How New Tax Rules Affect Real Estate Sales Before 2024

Discover how new tax rules affect real estate sales before 2024, impacting capital gains, deductions, and property transactions. Stay informed for smarter decisions.

Financial Freedom for Women Entrepreneurs: Unlocking Success with the 50-30-20 Strategy

Baby Steps to a Secure Future: Financial Planning and Wealth Management

Charting New Beginnings: Financial and Mental Well-being for Single Parents

Essential tips and strategies for enhancing both financial and mental well-being for single parents, empowering you to thrive and support your family.

Charting New Beginnings: Financial and Mental Well-being for Single Parents
5 ways to align your spending habits and be mindful of your money Previous
Basics of Financial Planning a Complete Guide Next
HDFC life
HDFC life

HDFC Life

Reviewed by Life Insurance Experts

HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER

We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Popular Search

Popular Searches