How to keep your credit score in such a crisis

If finances are tight, strategic is time. Knowing how credit scoring works in COVID times will help you hold your credit score up. A good score in effect leaves the credit line open, allowing you to repay at lower rates, if desired.

Whose credit score?

Credit score is a credit report review that ranges from 300 to 900. A score above 750 can help lenders avail credit at competitive rates. CIBIL, Experian, and Equifax are among India ‘s common credit bureaus with individual credit reports.

How’s scoring work?

Credit bureaus usually use four variables when offering a credit score. Credit history is around 30% of the overall weight on the mortgage commitments (defaults or late fees, if any). Form of loan used is secured or unsecured loan and the defined credit history term adds another 25% to the ranking. Total credit exposure (in amount) is another 25%, while the remainder are added by other factors like credit usage and recent credit conduct.

Here are the ways to maintain COVID credit score:

Payment time

Repay your credit card dues and EMIs promptly with warnings and reminders. Doing so improves your score for a year or so, even if you’ve defaulted on past payments.

If you have multiple cards and are unable to pay the full dues, pay the minimum amount due on all your cards (usually 5 % of the total dues). It’s safer (from a ranking perspective) than paying any card dues and defaulting on the others.

Aspects of credit

Duration of scoring credit history. So, don’t close your credit card, especially those with a long payment history. When you have not taken a credit card or any other loan, try buying a credit card (considering your salary and needs). Start building your credit background. Buying a new card will impact your score depending on circumstances. Although it may lower your loan balance rates, it can also lower your loan level.

Tackle imbalance

You can check your credit score free from a credit bureau website, while the credit report may be charged. The total credit report includes information on one’s debts outstanding and previous debt paid off or dismissed (including suits filed). The credit bureaus do not favour the latter.

Test if up-to-date unpaid numbers correctly represent your debt history. Any discrepancy must be promptly pointed to the credit bureau.

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