ability to receive loan It depends on how one has dealt with credit in the past. one less credit score Higher loan amount sanctioned for a significant purchase would mean hurdles while getting it. Hence it is important that one has a fair credit dealing with good repayments track record,

build credit history

Having no credit or loans in the past does not mean that you have a good credit score. In fact, if there is no data that can track the credit behavior of the customer, the credit score in such cases is at a lower level. So it makes sense to use credit cards diligently, take short and long term loans to build a good credit history. This helps the customer to get a competitive rate of interest and/or amounts for larger loans.

repayment track record

To build a good credit history, one must follow healthy credit repayment habits, by paying the credit card bills well before the due dates and paying the installments for various loans on time. Setting reminders and creating auto debit mandates for such payments helps in taking timely action and thereby boosts your credit score.

Check loan amount availed at one go

One must make sure that when the loan is taken over a period, they avoid taking different types of loans at the same time. For example, an outstanding vehicle loan can reduce your ability to get more credit with EMIs for credit card dues and personal loans at the same time. It is prudent to close one loan and then to the next one to show adequate liquidity and ability to repay the loan on time.

things to note

• Multiple inquiries for loans to different lending agencies also affects the credit score negatively.
• If there are any data errors in the credit report that affect the credit score, one can apply for rectification with the credit rating agency.

Content on this page is courtesy of Center for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.