Today’s time I can need a loan from the bank at any time. We all take personal loan, home loan or car loan according to our needs. The bank checks the credit score before giving a loan. If the credit score improves, the banks easily pass the loan. However, sometimes some mistakes occur, causing the credit score to deteriorate. After that it becomes difficult to take a loan from the bank. Today we are telling you about those 3 common mistakes. If you make these mistakes then the bank will never give you a loan.
First mistake: not paying EMI on time
If you are not paying the EMI of your loan or credit card on time, then you are making the first and biggest mistake. Major Financial Institutions and Credit Bureau consider it a “red flag”. A delay of just 30 days can also drop your score from 50 to 100 points. The Reserve Bank of India (RBI) also considers timely payment in its financial stability reports as compulsory for credit access. If you do not pay time for EMI on time, your credit score will be bad and the bank will not get a loan.
Second mistake: Excessive use of credit card
If you use more than 30% of your credit card limit, it negatively impacts your credit score. This indicates the bank that you are highly dependent on debt. This may have to take a loan at expensive interest rates in future.
Third mistake: closing old credit account
People often close their old credit cards or personal loan accounts without knowing. But by doing this, your average credit history becomes small, which causes the score to reduce. Credit Bureau sees this factor as a “repayment history relay”.
Credit score range and means
300 – 579 Bad (POOR) High Risk, Loan Rejection Possibility
580 – 739 average (FAIR) Credit can be found, but at high interest rate
740 – 900 good/excellent easy loan approval and better conditions
What to do to do credit score rather than?
- Pay the time of loan of loan
- Spend below the limit with credit card
- Do not apply for loans at several places simultaneously
- Reduce debt burden
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