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Impact Of Credit Scores On An Individual’s Borrowing Power

Finance is one such domain where an individual is required to have not just knowledge but a comprehension of how to manage and funnel their expenses to avoid being broke. Apart from the stable and uncertain income streams an individual earns, there are several instances where they are forced to turn toward borrowing money on credit. This loan could be for a long-term asset investment such as an advance loan, vehicle loan, etc., or to fulfill short-term needs that arise during hours of need or emergencies.

Irrespective of the circumstance, a quick loan or salary loan through online applications have made the process easier and convenient. However, every lender, traditional, online, and so on, would first inspect your credit score. Upon perusal and examination of your credit score, the loan amount you are eligible for would differ and be granted accordingly, post verification.

However, what exactly is a credit score?

Credit Score

The range of credit scores is between 300 to 850. These credit scores are allotted based on various factors, such as the time period within which you paid back your credits, the time period of your bill payments, and so on. A credit score of 300 reflects a poor credit score, while 850 depicts a strong credit score that unlocks the doorway to a higher loan amount. There are several Indian loan app that would help you to check your credit score.

The downside of having a lower credit score is that you would attract higher interest rates, lesser amounts of loans, unfavorable down payments and repayment conditions, etc. The worst possible outcome that could be derived from a lower credit score is that institutions and lenders would mark you as ineligible for acquiring even a travel loan due to a bad track of credit dealings and score.

How to Increase or Maintain Your Credit Scores?

A good credit score means greater borrowing power which is the ultimate aim for several individuals who opt for loans frequently. Starting from scratch or reflecting on a bad credit score can be a slow process. However, gaining a good credit score and, ultimately, credibility is worth all the hardships. Below mentioned are a few of the ways through which you can raise your credit score levels.

  1. Clearing Your Debts

Clearing debts is the most integral part of increasing your credit score, i.e., clearing all your pending debts and bill payments. This helps institutions and applications to get a clear picture of how reliable individuals are in paying back their dues and credit.

  1. Balance

Although this factor is not considered significant by many, keeping a low credit card balance can also aid in increasing your credit score to a great extent. The standardized suggestion is less than 25% of that of the credit limit, which gives away a good impression.

  1. Timely Payments

Your expenses are tracked and monitored by not just you but several institutions and credit score bureaus responsible for the increase or decrease in an individual’s credit score. Timely payment of bills can be another factor that can help increase the credit score.


Credit score can highly impact your borrowing power and the benefits you can avail yourself of while procuring even a personal loan emergency. Be it interest rate, the terms and conditions of the loan repayment, or the lender, everything would differ as per your credit score.

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