Finance

Important Money Questions to Ask Yourself if You Check Credit Score but Find it Low Always

Both the credit forms, i.e. loans and credit cards play a significant role in our financial life. They help us manage financial emergencies, accomplish important financial goals, maintain our liquidity, and get funding whenever required. 

However, if you misuse or are careless towards these available credit facilities, it could hurt your finances and credit profile. Their impact can be found out by seeing if your credit score has increased or decreased, through the check free credit score facility.

So consider the following questions to be answered about your various credit-related habits that could be harming your credit score:

Do I frequently charge more than I can afford to pay back on my credit card?

Consumers do have a tendency to take the easy way out and pay only the minimum amount due, which is typically 5% of the total amount owed, when they spend more than they can afford to repay promptly and in full by the bill due date. Even though this practise of paying the bare minimum amount due by the due date can spare you from paying late fees, the unpaid balances would still be subject to high finance charges. Any missed payments, no matter how small, could result in late fees and harm one’s credit rating. To see if there have been any changes that reflect how you handle credit repayment, you can even frequently check free credit score.

What steps should I take if I’m having issues making prompt, complete credit card payments?

If you are having trouble making full and on-time credit card payments, think about converting all or a portion of your debt into EMIs. These conversions have up to a five-year repayment period and interest rates that are significantly lower than the high finance charges. When you convert your outstanding credit card bill into EMIs, either in full or in part, you can continue to benefit from the interest-free period on new card transactions as well as make repayments at significantly lower interest rates and in smaller tranches. To see the results of your efforts to raise your credit score, keep in mind that you can check credit score on the bureau’s website or on any of the numerous financial portals that offer this service.

What risks might I run in terms of money if I use my credit card erratically?

There can be a lot of negative financial repercussions if you don’t make credit card balance payments on time. One of the biggest traps is the imposition of high finance charges and late payment penalties, as well as the elimination of the interest-free grace period and the withdrawal of pre-approved offers by card issuers. Other traps include the discovery of a negative impact on credit score when you check credit score. Users of credit cards need to be aware that inconsistent payment schedules and balance payments could, at worst, trap them in a debt cycle.

Have I ever withdrawn money using my credit card? Is that a wise plan?

A cash advance fee of up to 3.5% of the amount withdrawn as well as finance charges from the day of the withdrawal until the date of repayment are both applicable on cash withdrawals made through a credit card. As a result, these withdrawals should only be used as a last resort. If you must use your credit card to make a cash withdrawal, make sure to pay the entire balance back as soon as you can. To ensure that no errors slipped through the cracks and negatively impacted your credit score, check credit score each month to monitor your credit repayment history.

How can I improve my credit score?

People with low credit scores can improve their scores by practising sound money management, such as making on-time payments on credit card bills and EMIs, keeping their credit utilisation ratio under 30%, monitoring co-signed/guaranteed loan accounts, and maintaining a healthy credit mix. When they check free credit score occasionally, perhaps once a month, if they adhere to these suggestions, it might eventually start to rise.

While those who have just received credit, or those who do not yet have a credit history, can improve their credit score by using credit cards sensibly and paying their bills on time. People who are unable to obtain regular credit cards due to a variety of factors, such as poor or no credit, risky job profiles, insufficient income, unserviceable locations, etc., have the option of applying for secured credit cards.

Do I need to regularly check your credit report? What if I don’t? What possible consequences might result from not doing it?

The information that lenders and credit card companies include in your credit report is used by credit bureaus to calculate your credit score. Inaccurate information on your credit report may lower your credit score. When you check free credit score through your credit report, these errors are particularly likely to be the reason for a sudden or unexpected drop in your score. You won’t be able to spot such errors, whether they are due to clerical errors made by the bureau, lender, or card issuer, or a potential fraudulent credit transaction, unless you routinely review your credit report. Each of India’s four credit bureaus offers consumers a free credit report once a year.

It is advisable for borrowers to compare interest rates provided by various lenders before submitting loan applications. What factors should borrowers consider when selecting a lender?

Depending on how each lender assesses the credit risk, there can be significant variations in the likelihood that a loan or credit card will be approved. Some lenders may have more lenient loan eligibility requirements than others when evaluating loan applications. Similar to this, the cost of borrowing money influences how much lenders charge in terms of interest rates and other fees and charges. As a result, before submitting their final loan applications, borrowers must carefully assess the loan offers they receive from as many lenders as they can. They should start their search by inquiring about any potential loan offers with the banks and NBFCs they already do business with. Compare the rates and deals provided by other potential lenders using that as a benchmark. Never forget to check free credit score before applying for a loan to ensure that, at the very least, it won’t be a factor in the lender rejecting your application or making it more difficult to get a loan approval.

Heana Sharma

Heana Sharma: A rising talent, Heana boasts 2 years of versatile content writing experience across multiple niches. Her adaptable skills result in engaging and informative content that resonates with a wide spectrum of readers.

Related Articles