These 5 tips will help you to improve your credit score during COVID-19

Nobody ever anticipated of difficulty and scenario when the COVID-19 began to put its foot on the globe.

For real estate investors and purchasers, a global pandemic that left no industry was like a nightmare. But one thought that seeped into everyone’s mind was having their property as a sense of security rather than living on rent.

As COVID-19 made a very major impact on the real estate industry, the financial blow dealt by individuals was also unprecedented, and the option of taking a loan was considered by many to buy their property. With easy EMI’s and low-interest loan plans, one needs to have a good credit score to avail the same. So let’s find out what exactly a credit score is and the top 5 tips to improve it during COVID-19.

What is a credit score?

A credit score is a numerical value, a 3 digit number, calculated to know the creditworthiness of an individual or the ability of an individual to pay back the borrowed amount. It ranges from 300 to 900, and the lower the credit score, the higher the borrower’s interest.

According to the Reserve Bank of India, only four companies are authorized to share credit score information: Credit Information Bureau India Limited (CIBIL), Experian, Equifax, and CRIF High Mark, also known as credit bureaus. As your credit score depends on multiple factors such as repayment of previous loans, credit history etc, there are many factors to improve it.

• Review credit report The first step is to analyze your credit score report and mark the unnecessary errors, you can request a credit report from credit bureaus free of cost. Having a mistake in a credit report is usual and getting it rectified is necessary. A credit score falling between 700-800 is a healthy one but crossing the mark of 800 is exceptional.
• Manage your previous payments If you’ve previously taken a loan or have any pending bills, pay them off before applying for a new loan. This will not only help you clear your debts but will also help you improve your credit score and scale back on unnecessary expenses to save for EMIs and bill payments.
• Credit usage Examine your credit usage in your TransUnion CIBIL report’s credit summary. Keep the usage of your credit at a rate of 30 to 35 percent. At the very least, try to keep it below 50%.
• Avoid cancelling your credit card If you have an active credit card, don’t cancel it and try to make few payments with it and your credit score also depends on the duration you have kept your credit card.
• Keep a check on FOIR FOIR (Fixed Obligations to Income Ratio) refers to your monthly income as well as the additional instalments used to pay off your regular EMIs. FOIR is a criterion used by banks to determine a person’s loan eligibility. Reducing your FOIR will help you improve your credit and lending options. The best way to improve your credit score is to repay your existing debts. A higher credit score enables you to obtain a loan at a lower interest rate and to qualify for many more reimbursement benefits.

As COVID-19 shook many industries, it may be difficult for you to manage this financial stress, but once payments resume, your credit score will be back on track. When applying for a home loan, be careful to choose the right and flexible plan and make your home investment wisely.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.