As we all know that credit score plays a very important role in availing any line of credit for any individual. Apart from individual, banks and financial institutions also provide credit to companies based on their credit score.
Firstly let us understand what a credit score is and how it is derived.
Credit Score is a three digit numerical figure which describes the creditworthiness of the individual and also for any company. Credit score ranges from 0 to 900 for all the bureaus. Credit score is calculated from the credit report provided by the credit bureaus of the country.
In India, the major credit bureaus are CIBIL, Experian and Equifax. These bureaus provide credit report based on the information provided by the member banks and financial institutions. These bureaus collate all the data received from the banks and financial institutions and provide credit report to individuals as well as to the companies.
Credit Score plays an important role in the financial planning. Being an important aspect of the ones financial planning, many individuals do not take credit score very seriously.
A recent survey reveals that 1 of 4 individuals have the awareness about the bureaus. Also as per the survey, 92% are unaware of credit score. Not only that, it was also unbelievable that 98% of the individuals were unable to understand the credit report provided by the credit bureaus.
It is really important for individuals to be aware about the credit bureaus and credit score. For individuals who are aware about credit score and credit bureaus, they are not aware about the parameters that are important for improving their credit health.
For improving ones credit score, they need to work on the below important parameters:
• Length of Credit History
• New Credit
• Types of Credit
• Income Expense Ratio
• Debt Income Ratio, etc
Having proper knowledge on the above parameters and working properly on the same will help individuals and companies to improve their credit score.
Many individual think that making payments on time for their debts will help to improve their credit score, but this is not the case. There are other various parameters which are crucial for improving their credit score and credit health.
Also checking your credit report from time to time will help to keep a track on the lines of credit that you have taken. It also helps you to trace out those accounts which are not applied by you. Checking your credit report frequently will help you to protect yourself from Identity theft.
Credit Sudhaar is India’s first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.