5 MinsNov 26, 2021
Peter Drucker is often referred to as the father of modern business not because he gave birth to a new business form, but due to his inept ability to reassess the way businesses were transforming in the modern world.
One of Drucker’s fundamental quotes that fuelled his legendary transformation was - “If you can’t measure it, you can’t improve it”. One may argue that there was nothing much in this narrative that the world hadn’t been already practising. Well, so was the force of gravity, which existed even before its presence was discovered by Newton.
Drucker’s short observation on the power of measurement isn’t a piece of exclusive advice only for business houses. It’s the fundamental approach for every human being towards fulfilling any life goal including investing and acquiring credit (loans).
Banks and financial institutions including the likes of Axis Bank, the fourth largest private sector bank in India, follow a few basic scores to decide on loan (credit) eligibility for a customer.
While being ‘Dil se Open’, Axis Bank would strive to serve all its loan seeking customers, however, such basic checks become mandatory both from procedural and regulatory points of view. The most important of those checks is relying on third party credit score aggregators like Cibil and Experian.
For many customers unaware of this fact, managing credit becomes a herculean task as they continue to remain ignorant about credit score measurement (and impact) techniques. Therefore, such customers are often victims of surprises when they apply for a loan and their application gets rejected.
[Also Read: How to Check Your Credit Score]
Managing credit is a lot simpler than one may assume. Here’s a list of a few key factors and the impact they have on your credit scores:
|Payment History||High Impact||Payment history is the month-on-month record of your payments towards your credit card bills and loan EMIs. Regular and timely payments, boost your credit score.|
|Credit Utilisation Ratio||High Impact||A credit utilisation ratio is calculated by dividing the total outstanding loan amount by the total credit limit. It is recommended to not exceed or go beyond your credit limit.|
|Age of Credit Accounts||High Impact||A long credit history gives an in-depth view of your credit behaviour as compared to a short credit history.|
|Total Accounts||Low Impact||It’s important to maintain a good balance of secured as well as unsecured loans as a good credit mix can help increase your credit score.|
|Credit Enquiries||Low Impact||Applying for too many credit cards or loans at the same time could signal that you are relying too much on lenders and may affect your credit score negatively.|
Today, having a good credit score and credit history can help you get a loan approved fast and possibly at a lower rate of interest. A credit score is an indication of your creditworthiness. It indicates your ability and more importantly, your willingness or intent to repay the loan over the long term. This quality is something lenders value and hence it is in your interest to ensure a healthy credit record for yourself.
To apply for Axis Bank 24x7 Loans, you may click the link below or call 1860 419 5555 / 1860 500 5555 for help.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.