Credit score is a financial passport that opens doors to a world of opportunities or can easily constrain your financial journey too. Building and maintaining a strong credit score requires a strategic approach and disciplined financial habits. S Ravi BSE , former Chairman shares his views on how you can understand the credit score and build a strong score though financial discipline and strategy.
According to the former BSE Chairman, there are several factors that will influence the trajectory of your credit score and some of key components include factors like your payment history. Making timely payments on credit cards, loans, and other financial commitments can dramatically improve your credit score. The longer your credit history, the more information lenders have when determined your creditworthiness. Keeping older accounts open improves this component of your credit score. Even a wide mix of credit accounts, such as credit cards, instalment loans, and retail accounts, might help boost your credit score. However, it is critical to handle these accounts appropriately.
Building a good credit score is a proactive process that needs due investigation and effective financial planning. Begin by setting a budget and living within your means. To minimise missed due dates, make sure to pay bills on time and set up automatic reminders; otherwise, credit responsibilities might swallow you quickly.
According to the views of S Ravi BSE, a high credit score opens the door to improved financial options, such as cheaper loan interest rates, advantageous credit card terms, and increased credit limits. It increases your bargaining power when dealing with lenders. You can use your creditworthiness to get better rates on loans and credit. Some insurance firms utilize credit ratings to calculate premiums. A higher credit score may lead to lower insurance prices. On the other hand, he also explains that a poor credit score can result in loan denials or approvals with higher interest rates, limiting your lending options. With a lower credit score, you are more likely to be offered loans and credit cards at higher interest rates, resulting in greater overall borrowing expenses.
Therefore, Sethurathnam Ravi , former BSE Chairman suggests the public that it is always important to understand the factors that influence your credit score and how financial decisions impact your creditworthiness. He advises people to stay informed about your credit status by regularly checking your credit reports. Your credit score is a powerful financial tool that can shape your financial future and a good credit score can open relevant doors. S Ravi concludes speaking about the importance of building a strong credit score which is a gradual process that requires discipline and financial responsibility.