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The secret to improving credit scores for preferential loans with lower interest rates

Friday 05, 06 2020
The credit score is a factor that governs loan rates, as your credit score is higher than someone else's meaning that your loan interest rate will be lower.
The secret to improving credit scores for preferential loans with lower interest rates

The importance of credit score

The credit score is an indicator of your current financial position so that a bank can decide whether or not to lend.

In the world, credit institutions assess a borrower with a FICO credit score (Fair Issac Corporation - a very reputable personal credit rating company) on a scale of 550 - 840. Experts in our country also build a separate credit scale that is slightly different and under the management of the CIC credit center as follows:

The importance of credit score

 When will your credit score change?

There are 3 major groups of criteria that affect your credit score:

  • Amount of debt and status

  • Debt repayment history

  • History of credit relations.

Specialists will calculate your credit score based on these 3 groups. Details of this content are shown in the following table:

 When will your credit score change?

The lower your credit score is, the higher the interest rate you will need to pay, and you may not even be qualified for a loan. Therefore, if you want to get a loan with a more preferential interest rate than others, you must find ways to improve your credit score!

The secret to improving credit score

If you do not understand the above criteria to find the best solution, you need to ensure the following principles of borrowing:

  • Limiting loans from many organizations

  • Lending more often from fixed institutions and paying on time.

  • This does not mean that you have to borrow money to wait for your credit score to improve, while not knowing what to use them for and still have to pay interest on these new loans. It is important to understand that your bank's prepaid credit card is equivalent to a loan. Accordingly, the advantages of using a credit card are:

  • Having a regular loan from a credit institution;

  • Gaining access to a large amount of money, receiving continuous preferential treatment, enjoying interest-free of 45 days.

It can be seen that a credit card is a payment tool that saves a lot of money, but it is also a double-edged sword if used incorrectly, whether accidentally or intentionally.
At present, there are many people who only use credit cards to "borrow money" for cash but they do not know how to do it, which is similar to harming themselves, which is considered a big deduction point for credit scores!

How to use your credit card properly

The most taboo thing when using a credit card is to withdraw cash. If you intend to use your credit card as a "working capital" to borrow money at any time, not only will your credit score not increase, but it will fall very badly. Therefore, the first rules to remember by heart are:

  • Do not withdraw cash from credit cards unless it is absolutely necessary.

  • Pay your debt on time on a monthly basis to get a new amount for the following month, and continuing this for 2-3 years

  • Do not cancel the card without having used it for more than 6 months

  • Use it to pay, shop online, buy 0% installments instead of cash, and take advantage of promotions.

>> Easiest Ways To Improve Your Credit Score

Source: https://thebank.vn

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