Every day, while scrolling down our gadgets, we come across a lot of information on the internet based on credit scores. You can probably get tons of suggestions on building your credit score and where you can take the loan with a minimum score you have. But have you ever wondered what impact your monthly income could have on your credit score?
You can be happy to know that your income does not affect your credit history in any way. However, banks and financial institutions may ask you to mention your monthly income statements when filling out a loan application. It is only because they want to match up your loan repayment capacity.
Hence, the question arises, if not income, what harms your credit score? This comprehensive article is here to ease all the confusion you have about credit scores and things you need to be aware of to build a good credit score.
What does a credit score mean, and how a low income can hurt it?
A credit score is a three-digit number representing a customer’s creditworthiness based on their past credit history and rating they built so far. It is a significant factor that highly influences your chances of getting a loan request approved. If someone has no credit background, possibilities are pretty high that your loan request will be denied or even rejected.
Also Check : How to Get a Loan with a Bad Credit score?
However, bank and financial insulation might look for two things when assessing your application or profile. Based on those factors, they shortlist you for a loan. The first is your customer worth, which best defines your loan payback ability, and the second is your credit risk, which refers to how quickly you have previously returned the loan amount (if taken any).
Keep reading this article and learn more about how one’s credit score can be affected in various ways.
Watch out for the factors that harm the credit score.
As we already know, the credit score depends on your history and transactional pattern and has no relation to your income. Hence a strong credit score is a key to one’s financial health as it gives you access to many perks and offers, and not having one can be a bit of trouble.
Let’s look at some of the elements that are responsible for your credit score degradation.
- It may cause a bothersome task if you took out a loan with a low income but cannot repay it in the agreed time. Then lenders may also find it suspicious and might refuse to lend you in the future. It is always suggestible to take out a loan within your limits and your payment capacity.
- Building a new credit score is a complicated and lengthy process, and it might even consume a significant portion of your time. Hence regardless of whether you earn a lot of money or have not applied for a loan anywhere from the beginning. Building a good credit score is really difficult.
- Your credit score can be damaged if you go overboard with your spending. Therefore, you should be a consistent user and use your credit wisely and responsibly only when required.
- You must avoid high utilisation of credit cards and other lines for a better experience.
- Lenders are least interested in those candidates who have ongoing concerns with other lenders regarding loan sanctioning and credit card issuing etc. Make sure all your past loan inquiries are either settled or completed.
- Repetitive loan patterns build high-low tides on your credit score’s graph. For this, try to limit your budget so that you do not have to compromise on your expenses and get them covered with the available funds.
- Not paying your bills on time can majorly affect your credit score in the wrong way. Every time you leave the bills unpaid, your credit score goes down the scale. Attempt completing your payments and obligations duly and promptly to ignore any hindrance in your score.
It is always advisable to check your credit score once a year for your financial well-being. Buddy Score is such a platform where you can narrow your credit score in a few minutes for free just by following a simple process.
How can you get a loan with a bad or no credit history?
Under any circumstances, getting a loan with no credit history is difficult but not impossible. Several non-banking financial institutions (NBFCs) help their customers find a better option with finding a loan online without asking them for credit history. Moreover, many mobile applications and websites also solve people’s problems with getting a loan successfully with a bad or no credit history.
A customer’s net salary can tell you a lot about their value. If you want to obtain a loan with no credit record, then you must pay attention to all the necessary details and eligibility criteria you need to meet. In this regard, Buddy loan is a great help to guide you through the hassle-free process and can also assist you in getting a loan in no time.
In Buddy loan, you can also get any loan amount of up to 5 lakhs with interest rates starting from 11% per annum only and suitable tenures of up to 10 years and no collateral involved in the form of pledge, land, etc.
People Also Ask
- What is a credit score?
A credit score is a three-digit number starting from 300 to 900, representing a customer’s creditworthiness based on their past credit history and rating.
- How good or bad is a credit score of 600?
A credit score of 600 is considered fair and approachable by lenders and banks.
- How to check my credit score online in India?
In India, there are some trusted applications and web portals approved by the reserved bank of India (RBI) through which you can get your credit score checked.
- What is considered a good credit score?
A good or a decent credit score can be described as the score that can get you a loan with a lower interest rate and can be helpful to attract many other perks. Usually, a credit score of 700 or above is deemed a good credit score.
- What is the highest credit score?
Credit scores range from 300 to 900, and by looking at the ideal figure, it can be seen that 900 is the highest possible score one can have.
- Can I get a loan with a 720-credit score?
Yes, you can get a loan with a 720-credit score as it is an exceptional score and can excessively favor you while approaching a loan.