What Is The Formula For Calculating A 30 Year Mortgage 4 Top Factors To Calculate Your Credit Score

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4 Top Factors To Calculate Your Credit Score

Understanding your credit score

TransUnion Credit Information Bureau (India) Limited (CIBIL) is the main agency that calculates your credit score. It uses advanced analytical methods to determine a score between 300 and 900. A credit score closer to 900 makes it easier to get a quick loan with a competitive interest rate. Although each financial institution has a different credit score limit, most lenders are willing to lend money if your score is above 750. However, a high credit score does not guarantee that your online loan application will be approved, as lenders consider several other factors when determining sanctions. your loan.

1. Credit history

Credit history is weighted 30% by age when calculating your score. Banks and non-banking financial companies (NBFCs) share your personal and credit-related details with credit bureaus. The bureau then compiles the information on the report submitted to them by the financial institutions. CIBIL maintains monthly details of your bills and Equated Monthly Installments (EMIs) for the last three years.

Your credit report includes the status of all your accounts, showing whether they have been charged off, settled or are still outstanding. In case of delays, it records the number of days past the due date. Therefore, if you are late or late on a payment, it will negatively affect your credit score.

2. Credit mix

CIBIL score depends on the components of your loan, which means the sum of secured and unsecured loans. The percentage of credits in your overall score is 25%.

Any delay or default, regardless of whether it is a secured or unsecured payday loan, will negatively affect your score. However, if you have a higher load of unsecured loans, it will lower your score even if you have made your payments on time. On the other hand, repaying secured loans on time will positively affect your credit score.

3. Use of credit

Your credit utilization percentage shows how much money you’ve borrowed compared to how much you might actually qualify for. The proportion of credit utilization in the total credit score is also 25%.

Using credit requires your credit limit and the amount actually borrowed. Higher utilization for a period is viewed negatively by credit bureaus because it indicates that your load is increasing over the period.

4. Others

The number of loans you have applied for recently is 20% of your credit score. This is reflected in the query section of the report. If you have made several inquiries, the credit bureau will view it negatively.

A credit report not only affects your ability to get easy loans, it also affects the terms. If you have a higher score, you have a better chance of being approved with preferential terms. It is recommended that you check your score before applying for an offline or online loan to reduce the chance of rejection due to a lower score.

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