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Business News/ Money / Personal Finance/  Factors that must be corrected to avoid damaging your credit score in the future

Factors that must be corrected to avoid damaging your credit score in the future

Small unwanted habits of neglecting to repay the amount due or ignoring minor details considering the latter to be of less importance can have an aggravating impact on your credit score. Correcting those errors in time is the best way out to ensure a good credit score that reflects your ability to repay your loans on time. 

Improving your credit score (Pixabay)Premium
Improving your credit score (Pixabay)

A good credit score can go a long way in seeking finances on credit at reasonable interest rates. A good credit score can undoubtedly take you places, especially, when it comes to using financial products including loans, credit cards, mortgages and others. This is important considering the number of millennials who face rejection while seeking loans or money on credit from banks or other financial institutions.

To ensure a good credit score or prevent it from losing its sheen, you must do more than just refrain from defaulting on loans. Not many people notice how discrepancies in their financial habits or erroneous decisions regarding credit and investments can adversely affect their credit score.

Invalid credentials 

Identity errors owing to typo errors or incorrect credentials including wrong addresses, misspelt names or invalid contact numbers may cause the financial institution to misconstrue you for another. This means that someone else’s credit score is attributed to your name, thus, leaving you with a poor credit score. Many borrowers often complain about how their loan applications are rejected or delayed with lenders often mistaking them for some other person. Such incidents are common though are still ignored often at the peril of people queuing up for loans outside financial institutions. If you are a victim of such mistaken identity, ensure to get it rectified to avoid unwanted hassles in the future by updating your correct details with the relevant institution(s). 

Account-related mistakes

How many times you may have heard that banks failed to update your details after you close your account(s) with them? No matter how frustrating it may sound, incorrect account status can have a damaging effect on your credit score. Some common instances that can result in inadvertent account-related errors include:

  • Details of closed accounts not updated in the institution’s database
  • Wrongly reported details of savings or current accounts
  • Debt fraudulently incurred from more than one institution under different names.

Ways to improve your credit score

A low credit score is indeed a cause of concern, but must never be the cause of your frustration. This is because improving your credit score is not that difficult. Firstly, you must work on your loan repaying ability. It does not matter what kind of debt you have incurred. Paying your equated monthly instalments (EMIs) and credit card dues on time can boost your credit score. This is important as today’s generation seeks only to pay the minimum amount due on credit card bills, thus, affecting their credit score in the long run. Delayed payments incur heavy interest rates and penalties as added charges, thus, only making it more difficult to repay the bill drawn on the card, thus, making it imperative to pay off the entire credit card bill by the due date. 

A good credit score is important to get a tempting rate of interest
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A good credit score is important to get a tempting rate of interest

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Published: 03 Jun 2022, 08:21 AM IST
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