Every loan consists of three parts: a lender, a borrower, and conditions upon which the loan would be repaid. Financially speaking, a loan is disbursement of money by one person to another person, upon certain agreed terms and conditions. The former is called lender and the latter is called borrower. Every loan consists of conditions that both the parties agree.
A loan is usually undertaken when a person wishes to spend on something which involves a considerable investment, such as real estate or vehicle or education, which could not be borne entirely. A loan is usually preferred from banks because of the ease of repayment options. In order to obtain a loan a person needs to maintain a healthy credit score.
What is a credit score?
In layman terms, a credit score is termed as a statistical number that would allow a person to obtain a loan easily. It defines a person’s credit worthiness based on which the loans are disbursed by the banks. It is usually calculated upon certain parameters which the lenders decide. A good credit score often lies in between 300 to 850.
A credit score plays a vital role in the loan process as it builds the confidence upon the lender to disburse the money. In case a person has good credit score, a person could be entitled to obtain a loan by phone or even an SMS loan as well. The banks can offer such services who maintain good credit score.
Advantages of credit score
Having and maintaining a good credit score would be beneficial to people, does not matter even if they do not want phone loans. This could let one have a lower interest rate for the taken credits.
How to get a good credit score
Having and maintaining a good credit score is not a tough task. The people can easily obtain and maintain a good credit score by following the below mentioned points:
- Watching and maintaining the credit card balances.
- Paying the dues and bills on time.
- Avoiding any forms of debts.
- Duration of credit history
- New credits obtained
If a person adheres to these points, it becomes easier to obtain a loan immediately or in future as the lending bodies closely monitor these points. This is not a herculean task to accomplish. In order to maintain a good credit score, one needs to fully understand it first. The below mentioned points could help one to understand credit score.
Deciphering the credit score
Every lender has its own parameters to credit the amounts. Some give weightage to a higher credit score while others are satisfied with mediocre credit scores as well. The mindset of the lenders, along with the standard ranges for credit scores are mentioned below:
- Excellent: credit score equal to or more than 750
- Good: credit score lying in between 700 to 749
- Fair: credit score lying in between 650 to 699
- Poor: credit score lying in between 550 to 549
- Bad: credit score lying below 550
While a loan might not be mandatory for everyone to take, however, it is still advisable to maintain a good credit score. As the bank come up with lucrative offers from time to time, it would be easier for a person to obtain a loan by phone with a good credit score.
How to elevate the credit score
Keeping a check on the above mentioned points would definitely let one to have and maintain a healthy score, in order to even get phone loans an SMS loan; there are certain tweaks that one can use in order to better the credit score. A few of these points are mentioned below:
- Elevating the credit line: this would assist one to maintain a lower outstanding of bills in the credits cards.
- Keeping the credit cards active: in case a person is not using a credit card, post full repayment of outstanding or after the issue; it is advisable to keep it active instead of closing the account as it impacts the credit score directly.
With the help of the above points, one can easily decipher the points to be considered in order to have and maintain a good credit score. This would help people to understand the credit score and manage it well.0