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What Makes a Good Credit History?


  • Eyeing a hassle-free loan approval? Maintain a Good Credit History to experience the same!
  • Read here how you can ensure a good history and get credits easily and at attractive terms

The approval to your loan or credit card application hinges on how good your credit history has been. The history not only tells your credit score but even shows your repayment track. A good credit score is 750 and above and almost guarantees you the credit you seek. The ‘Almost’ written above indicates things apart from your credit score, which is nothing but the repayment track.

Lenders check both before approving a fresh credit. However, credits like home loans don’t need a credit score for approval. But the score and repayment track will dictate the home loan interest rate. The higher the score, the lower will be your interest rate and vice versa.

So, whatever credit you have, manage it well and ensure a good history for getting credits easily and at attractive terms. We can guide you towards the same. Let’s read this post that has ideas for good credit history.

So What Should You Do for a Good Credit History?

The bottom line for good credit history is an impeccable repayment track that happens with the timely payment of debts, optimum credit utilization, applying with discretion, etc. We will focus on all these below. Let’s read further and implement appropriate credit actions for good credit history.

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How Does the Timely Payment Boost Your Credit History?

The payment of debts holds nearly a 35% weightage to your credit score. So, if you are paying your loan and/credit card dues on time, it will ensure a good credit history for you. Figure out your priorities and spend wisely to have the required sum to pay for your loan or credit card. In case you have multiple debts, you will need to check your expenditure pattern and eliminate the ones that are unnecessary. This will help you pay all your debts on time and maintain a good credit history.

Optimum Credit Utilization Holds the Key for a Good Credit History

People having credit cards should know the importance of an effective credit utilization ratio. A utilization ratio of around 30% or less is considered optimum. So, if your credit card limit is INR 1 lakh, you should not spend more than INR 30,000 in a month. But many could have a monthly income of INR 30,000 or even less. In that case, the eventual credit card spending should come down drastically. So, you should spend around 5-15% of your income with your credit card. With that, you could pay your credit card bill on time and get rewarded with a good credit history.

Don’t Chase Credits Despite Facing Rejections

Don’t apply for credits in a heap despite facing rejection each time. After you apply, lenders pull your credit report from CIBIL, Experian and other credit bureaus to check your credit score and the overall repayment track. This is called a hard credit enquiry and can decrease your score rapidly if rejections happen.

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So, instead of applying, you should check your credit report where you could know the reasons for rejections. Work on those, get your credit score up, and apply afterward. This will ensure less impact on your credit record as opposed to when you keep applying despite rejections.

Keep a Good Credit Mix for a Good Credit History

Don’t keep applying for unsecured credits as it does not make for a good credit mix. A mix of secured and unsecured debts is considered ideal, although it’s the payment of these debts that will impact your score more than anything else. But having more unsecured debts could decrease your credit score fast if you default on any of the credits. This could go on to dampen your credit record. To prevent such undesirable credit events, ensure you have a good credit mix.

Apply for the Credit When You Need

Apply for a loan or credit card when you need the most and when your savings are not enough to meet your requirements. Also, decide about the loan amount carefully based on your savings. This will lessen your debt burden, help you pay on time, and ensure a good credit history for you.

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Personal Loan Interest Rates July 2021
Fullerton India14.00% - 24.00%
HDFC Bank10.75% - 21.45%
ICICI Bank10.75% - 17.50%
IndusInd Bank11.00% - 23.00%
Kotak Bank10.75%
RBL17.50% - 26.00%
Standard Chartered Bank11.00% - 12.50%
Tata Capital10.99% - 19.75%
Home Loan Interest Rates July 2021
Axis Bank6.90% - 8.55%
Bank of Baroda6.75% - 8.25%
Citibank6.65% - 7.40%
HDFC6.75% - 8.00%
ICICI Bank6.75% - 7.55%
Indiabulls Housing Finance Limited8.65%
Kotak Bank6.65% - 7.30%
LIC Housing6.66% - 7.90%
Piramal Capital & Housing Finance9.65%
PNB Housing Finance7.35% - 9.05%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI6.70% - 7.30%
Tata Capital6.90% - 8.75%