The first feature is based upon the credit history of the customer. This is very beneficial as it let the lender know about the borrower’s background. The history tells all the details of the customers whether he has used low credit score credit cards.
In short, the proper report of the customer is checked. This kind of information shows whether the intension of the customer is good or not. Defining the history of both the lender as well as the borrower is important. Credit history contributes approximately 35% of the credit score.
Next important feature is the ability to pay back the loan. To be a genuine customer it is important to have a good history. It’s a great habit of paying all the instalments on time. By doing so the customers enter into the good books of the lender or the bank. By paying on time it also helps to avoid the extra charges.
Benefits- Paying credits on time helps to get the various benefits from the lender. These benefits are useful for future savings. The good image can help to get loans at low-interest rates in future. This ability to borrow from the market any time is the most important feature of having excellent credit.
Investing the surplus money in the market- The one who is having the surplus money can invest it in the market. It gives them a way of earning profits. The investor can give that money at a higher rate of interest.
Security of the loan- Proper file is maintained to keep the record this gives the security of the loans to the lenders and the borrowers. It contains all the important clauses which also include what will happen if the borrower fails to pay the loan on time to the lender. This way the loss could be prevented from the borrower’s side.
Interest rates and principal amount – Before giving up the loans it is important to settle all the conditions accordingly. Few conditions could be in favour of the customer and a few in favour of the lender or the bank.
It is not that there is only one type of credit, there are many versions of the credits.
Low Utilisation Rates: Excellent credit score tells about the low Utilisation of the user. This means that the user has a habit of maintaining the usage (keeping it below 30% as advised by experts). This makes the user fall in the low-risk category and more banks want to have business with this kind of user.
Combination of debts: When the credit score is prepared, all kinds of debts are considered. For example, if an individual has a credit score of more than 700 then he has managed his debt very well. Some of the common debt types considered are (student loan, personal line of credit, secured loan, Unsecured loan etc.)
Nowadays many people enjoy the benefits of credit card with fair credit. Most of them are not able to maintain their excellent credit score for a long period of time. Therefore let us check some ways of maintaining it.
Below are some tips through which a user can maintain his excellent credit:
•Knowing all the details:
The first step in maintaining the excellent credit score is that the user or customer should know about it in detail. He should know how things work in the background, how a credit score is affected, what are the factors working behind and how those parameters are manipulated for benefits. There are multiple types of credit scores available but most of the times FICO score is considered. This score is calculated by checking a lot of factors like total debt, payments history, total income, previous inquiries etc.
•Try to pay every bill before time:
Payment history contributes about 35% of the total credit score. This means if an individual has good repayment habits then he can keep his credit score excellent. In the calculation of payment history, every bill he pays is going to affect his credit score. If he pays before the due date then it is going to have a good impact in preparation of credit report.
Payment history is considered as the most important factor because banks and companies are going to lend their money. They just cannot put their money on anyone.
• Don’t keep the debt:
The debt an individual keeps tells a lot about his credit score. Missed payments can directly affect the excellent credit score in a negative manner. Here the individual cannot change his payments history but can apply debt management policies. Here he should understand that not every debt is a part of his excellent credit score. Thus, he should move accordingly.
Common individuals commit is the prioritization of debt. This means if the interest rate of the debt is low, they follow a lazy approach in repayments. This lazy approach can force them to use credit cards for low credit
•Never choose debt settlement option:
Well, a lot of individuals do not know about this in detail. When the debt is too high, individuals ask lenders to cut down some debt. Lenders agree to cut down the debt up to a limit. This is called as settling the debt settlement. Now individuals think that the burden of debt is reduced. They do not know that this shows their incapability in paying the total debt. The lender is going to notify this to the credit bureaus. Professionals in credit bureaus are going to mention the details in credit score and individuals can be deprived from using best credit card for 700 credit score.
•Utilisation of debt: Utilisation of debt or available credit can help a lot in maintaining the credit score. In FICO score, the utilisation keeps the weightage of 10% of the whole credit score. It is said that a user should not use more than 30% of the credit available. For example, if the credit limit of a user is $10,000 then he should not use more than $3000. This is because using more than 30% of the credit makes him fall in the high-risk user category. This situation is not good in case the user wants to use best credit cards for high credit scores.