Bank loan: Taking a loan has become a common thing in today’s life. Some want to buy a house, some want to buy a new car. Some have to bear the expenses of marriage, while some need money in a medical emergency. In such a situation, taking a personal loan, home loan or auto loan from the bank seems to be the easiest and most reliable way. But brother, the bank does not give any loan just like that! First of all, it checks your credit score – that is, how reliable you are in terms of returning the money. And if any problem is found in it, then understand that getting a loan will become impossible.
Now there are many people who knowingly or unknowingly make some big mistakes, due to which their credit score goes down. Then no matter how urgent the need is, the bank rejects your loan application. So let’s know about three such big and common mistakes, which you should never do if you want to take a loan in the future.
Not paying EMI on time
Suppose you have taken a loan or you have a credit card and its monthly installment i.e. EMI has to be paid every month. But if you do not pay this EMI on time, then it is considered a big mistake. Banks and credit bureaus take it seriously, and it has a negative impact on your record. Even if you are late by just one month, your score can fall by 50 to 100 points. And even RBI accepts the fact that only by paying the loan on time, your financial image remains clean. Once the score falls, it is not easy to bring it back, and then banks often refuse to give you a loan.
Excessive use of credit card
Now see, everyone has a credit card, and nowadays it is used for every small and big purchase. But if you reach close to or exceed the limit of your card every time, it does not send a good signal to the bank. They feel that you do not have control over your spending and are always living on credit. This weakens your image and the next time you apply for a loan, the bank starts thinking – “What if this guy gets burdened with more debt!” Because of this, such people either do not get a loan, or get it at very high interest rates.
Closing the old loan or card account
Many people think that let’s close the old credit card, it is not needed now. Or if the old loan is over, then close its account too. But this thinking is completely wrong. In fact, your old accounts are your biggest strength, because they show how long you have been using the loan or card and have repaid it properly. When you close them, your credit history becomes shorter. And the credit bureau sees it in such a way that you no longer have a long reliable record to show. This thing lowers the score and becomes a hindrance in the way of your loan.
Now let’s talk about what a credit score
Credit score is a kind of number which is based on your habit of repaying loans, status of paying EMIs on time, and your past borrowing behavior. This score starts from 300 and goes up to 900. The higher the score, the more respect you have in the eyes of the bank. If the score is above 740, then the bank gives the loan without much questioning and at a good interest rate too. But if the score is less than 579, then brother, understand that you should give up the hope of getting a loan, because the bank considers you a high risk customer.