Credit Score

When you buy a franchise, you might need a small business loan to finance your new business. Getting the loan might prove difficult if you don’t have a good credit.

Credit card issuers approve card applications based on factors such as income, employment and past credit history. If there is any inconsistency with regards to the past repayments, the card issuer is likely to reject your application. 550 is clearly a low credit score which may make it difficult for you to qualify for a credit card. However, the odds can be overcome by opting for a secured credit card.

Any credit score of 750 and above is a good credit score, and banks are willing to issue credit cards to individuals with good credit health. Income and credit score are the two important factors that play a decisive role for a credit card approval.

A credit score is a 3 digit number that represents the evaluation made on a person's capability to repay loan amounts and other debts like credit card payments. Credit bureaus like CIBILTM, Experian, Equifax, CRIF HighMark provide credit scores that are calculated based on their credit history. Having a good credit score is a must as banks and NBFCs provide you the top credit cards or loans based on your credit score.

Monitoring your credit score doesn’t reduce it. Accessing your credit report doesn’t have any affect on your score. Reviewing your credit score is a soft inquiry. A soft inquiry is made by lenders to check if you are preapproved for a loan or credit card offer, or if a potential employer wants to check your credit report. These inquiries are made with your permission and will not affect your credit score.

Borrowing money from banks would require you to fulfill certain eligibility criteria laid by them. The major criteria are your income, credit score and employment. When you are unemployed, it could be difficult for you to get approved for a loan. However, if you have regular monthly income through some source like receiving rent, you are likely to qualify for an unsecured loan.

Although the chances of bagging a loan with bad credit and without a guarantor are slim, there are still options. You can use your existing collateral to get a loan with bad credit. Following are some of the popular options.

Consolidating all your debt into one loan can be helpful for you to pay off all your debt slowly in one EMI plan. But this can also decrease your credit score as taking up credit will raise a hard inquiry, which will bring down your score by a few points. Having a new credit account is considered as a new risk, and this causes a temporary dip in your credit score.

There is a possibility of errors arising in your credit report. The errors can be a wrong name, address, identity number like your PAN or Aadhar card number, gender or even your date of birth. But these errors won’t affect your credit score. The errors that could actually affect your credit score are:

Your credit score will define your creditworthiness to lenders. With your credit score, lenders will be able to discern whether you will be able to handle new credit, that is, whether you will be able to pay back your loan or pay your credit card bills regularly.

Equifax is a credit bureau where they accumulate information on a consumer’s credit history to calculate a credit score. Equifax collects information from trusted sources and they prepare a credit report

There is no fixed amount that is set for a credit repair. The cost will vary from case to case. Besides the amount to be paid back to the bank to clear the unpaid dues, the number of negative accounts determine the cost of credit repair.

Hard inquiries are made when you apply for a new credit and the lenders check your credit report to make sure you are creditworthy. So, a hard inquiry will imply that you have applied for a new credit. If there are many hard enquiries that means that you have applied for a lot of credit which will look bad to the lenders. And in turn they would be reluctant to lend you the credit you need. If there is an inquiry from a lender, then your credit score will go down by 3-4 points, which will not affect your credit score that much.

When a lender wants to know your credit worthiness, they check whether you are eligible for a particular credit product by checking your credit report. A soft enquiry is made when a lender wants to determine if you are eligible for any pre-approved deals.

Each credit bureau has their own way of computing a credit score. The algorithm of how the credit score is calculated will differ and thus the credit score that all three bureaus calculate will not be the same. Banks report your credit activities to the credit bureaus who have different mechanism to arrive at the credit score.

A credit score is a three digit number that ranges between 300 – 900 and reflects your credit worthiness. Lenders look at your credit score before making any lending decision. A credit score of above 750 is considered as a good score.

Bad credit can be burdensome especially when you need a fresh credit from a bank, and you are denied. It can be stressful to have bad credit in such pressing situations. To be honest there are no shortcuts to improving your bad credit score. But there is certainly a way to get relief if you follow responsible credit behaviour.

The purpose of consolidation loans is to repair your credit score. It is considered as one of the best ways to improve your credit score. When you have multiple credits and are unable to repay them on time, you can take out a debt consolidation loan and repay all of them. By repaying all the other loans, your multiple credits are closed positively with 100% repayment record. You will now have a single loan i.e. debt consolidation loan

Boosting credit score overnight is impossible as there are a lot of procedures followed in updating your credit activities. After finding that you have a poor credit score, you try to find out what has impacted your credit score. You may have outstanding dues to be paid to the lender, you may have incorrect data on your credit report, or you may have a settled or written off account, etc. Any one of these factors may have affected your credit standing.

A loan consists of two factors – Principal amount and Interest amount. The Principal amount remains the same for all the applicant irrespective of what their credit score is, but depends on their income. But what matter is or makes a difference is the interest rate, which majorly depends on your credit score. If you have a good credit score, the banks can trust your credit worthiness and your repayment capacity.

Lenders see individuals with bad credit as risky borrowers. Upon that, an unsecured loan contains more risk to the lender as there is no collateral involved. Due to this reason, the interest rate on unsecured loans are generally higher. To be honest, the chances are lower with banks who might reject your application.