If you maintain good credit health, you will not be at credit risk. Credit risk is when your credit score is low and borrowing is not meant for you. If you are in business, you must maintain your business credit score. There are a few ways in which you can either maintain or destroy your credit score. Whether you are at risk or not is assessed by the business credit score. If the score is more than 750, you are not at risk. However, a score of less than 600 is a score that can bring in rejection. If you are trying to work out a credit risk assessment, here are all the factors that you need to maintain while checking your credit score.
Payment takes 30%: A good credit score comes with good credit habits. One such habit is paying bills on time. It is important to make on-time payments so that you can maintain your score. A good score convinces the financial institutions to have an easy and smooth approval process. The EMI or any bill should be paid by the due date and not after the bill's due date. Paying after the due date will harm your credit score and will present a bad credit history. Start working on automated payment options so that you can ignore rejection.
Multiple loan applications: When a borrower faces a rejection, the next action should be improvement. One should not keep borrowing and applying for multiple loan options. By applying multiple times, there will be a hard enquiry run on your score every time. This will damage your score further. It will not have any positive impact and you will make your credit worse. Make sure you do not apply for any further loans after being rejected. Learn How to calculate business loan by using business loan calculator.
A bill has two parts: a minimum amount and a full amount. While a minimum bill amount may look easy initially, for the long-term it will be expensive. When you keep an outstanding amount by paying just the minimum amount, you will be charged extra fees and charges. This will also hamper your credit score. Stop paying minimum bills and start paying the entire bill for the particular month.
Credit Utilization Ratio: A credit account comes with a particular credit limit. Do not use the credit limit completely. When you exhaust the entire available credit limit, you affect your score without even knowing it. Always pay your bills for the month so that you get back the available credit limit. This will help you get a good score as well as allow you to use it for future uses.
Credit Cards: A credit card is a very expensive form of debt. One should not use too many credit cards. It is very easy to use and very flexible. However, the pre-approved credit limit leads to wastage. High credit card bills become a burden and you end up missing out on payments, thereby damaging your credit score. Keep one credit card and only use it when you don't have enough money.
Credit Age: A long credit age is a good one for improving your credit score. If you are aiming to get a good score, you need to keep your credit account open. Do not close it even when you do not use it. This will not be feasible and you will end up losing your score.
Finishing up
Check your credit score by visiting Clix Capital. When you check your credit score online for free regularly, you will end up having the best experience borrowing. Avoid credit risk by maintaining good credit eligibility.
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