Credit Score: 3 Top Reasons To Keep It High

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The credit score ranges from 300 to 900. The higher the score, the better the applicant’s loan eligibility. Keeping it high is important for many reasons, including the following:

  1. Improves Eligibility: Since lending institutions determine loan eligibility based on applicants’ past credit habits, a high credit score helps them get easy loans without much effort. High-score individuals are low-risk borrowers for loan providers, making them feel safe lending to such applicants.

  2. Increases the Loan Amount: Loan seekers with high credit scores can apply for a bigger loan and qualify for one without hassle. Since lending institutions feel safe lending to them, they can lend them a bigger loan if they need it.

  3. Reduces the Interest Rate: Lending institutions offer lower interest rates to high-score individuals due to the low risk involved in lending to them. Since they have a low chance of default, loan providers do not want to lose such customers and lend with the assurance of getting it back on time.

Credit bureaus calculate it based on an individual’s credit history, repayment habits, and overall credit behavior. Those who repay their bills and EMIs on time and use credit responsibly build a high credit score over time. Lending institutions check this score before approving loan applications.

 

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