Why is it necessary to maintain a Good Credit Score

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I have been using the Credit Card for the last 5 years. I know as a keep tab on my expenses keeping a credit card should be avoided. But to be honest, Credit Card has come up in handy on some occasions and I am happy to keep them with the fact that I never miss my credit card payment as well as always pay the full amount. This way I keep myself away from the negative aspects of the Credit Card.

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PC: Pixabay.com

Now coming back to the Credit Score, it is the measure of your credit worthiness. That is how creditworthy you are and that is the first thing lenders check when you apply for a loan or a new credit card. It also gives them an idea of whether you have the ability to repay the amount and thus maintaining a good credit score is mandatory now. So the Credit Card is calculated after taking into some factors like payment history, credit exposure and the length of credit history. And thus a typical Credit Score ranges from 300 to 900 where havomg anything above 750 is considered healthy.

So what are the advantages of having a good credit score, they are:

Eligible for Loans - A good credit score gives you the ability to get new loans and credit cards.

Quicker Loans - The lenders used to pre-approve the loan to the individuals after checking the credit score.

Lower rate of Interest - I have seen it, whenever I wanted a loan I just used to show them my credit score and that they tend to lower the interest rate by 0.25% as well as free processing.

Now marinating a good credit score is actually a necessity in this fast-paced world, because you never know when there is a requirement comes to get a loan. My Credit Score is always been above 800 and thus it feels good that I can actually get pre-approved loans wherever needed.

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That is how the financial world works.
You need to prove you are able to borrow and pay, in order to borrow more.

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What you listed applies for the US but is it the same in India as well?

In the US, companies like Experian, TransUnion etc do it. Who does it in India?

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Yes, it is the same for India.

Who Computes Credit Score?

When you make a transaction—the one that is relevant to determine your score—banks send details about it to all four credit bureaus. To send details to all credit agencies is a mandate by the RBI. Essentially, banks keep Credit Information Companies up-to-date about your monetary habits. If a bank needs to check online credit score, they can approach any one of the bureaus. It doesn’t matter which one because all will have the same score for you– all four are equally authoritative and on par with each other.

From: https://www.bankbazaar.com/credit-score.html

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