If you are a chartered accountant, you must understand the importance of your credit score when applying for a loan or credit card. Chartered accountant credit score acts as a report card. Your lenders check your credit report to evaluate and assess your credit history and financial stability.
If you find your credit score to be below par, there are several steps you can take to improve it. In this article, we will discuss 6 easy tips to increase credit scores for chartered accountants. Additionally, we will talk about the chartered accountant's credit score range, the minimum credit score for a chartered accountant, along with some common factors that affect your credit score.
A chartered accountant's credit score ranges between 300-900, but a score above 700 is considered the minimum credit score for a chartered accountant. While we will focus on tips to increase credit scores for chartered accountants, Shriram Finance's diverse portfolio of credit solutions ensures they have options available for individuals from various professional backgrounds.
Our suite of loans includes business loans, personal loans, commercial vehicle loans, used car loans, two-wheeler loans, car loans, etc. We provide both fixed investment plan and fixed deposit plans.
Repay Outstanding Debts
Among the six easy tips to increase credit scores for chartered accountants, we will first discuss the importance of repaying outstanding debts. A chartered accountant can improve credit scores by paying off outstanding debts on time. Many people tend to pay only the minimum amount due without realising that this approach adds interest in the next billing cycle.
Consequently, the volume of debt increases, making repayments difficult, and having a negative impact on credit scores. Additionally, paying your bills on time helps strengthen your payment history.
Avoid Full Credit Utilisation
Maintaining a low credit utilisation ratio builds a stronger credit history and helps to increase credit scores for chartered accountants. Credit utilisation refers to the percentage of your available credit limit that you are using at any given time. Using more than 30% of your available credit amount is considered high utilisation, indicating poor creditworthiness. This way chartered accountants will improve their credit scores. With high credit scores, you will get access to increased loan amounts with favourable terms.
Steer Clear of Multiple Debts
Having multiple credit lines or credit cards might seem convenient, especially during emergencies. However, careless usage can lead to further debt accumulation and have a bad credit score impact for chartered accountants. It is essential to exercise caution when managing multiple cards and ensure timely repayment for each card.
Furthermore, securing excessive loans from different lenders can also hurt your credit score. Close existing loans before applying for new ones. These practices are good for managing debt load and increasing credit scores for chartered accountants.
Vary Your Credit Options
A credit score impact for chartered accountants can come from several avenues including restricting the credit channels or limiting to a single or few credit types. To improve your credit score, incorporate a mix of long-term and short-term loans and secured and unsecured loans. Having no credit history may not serve you well either since it indicates a lack of experience in handling loans.
Maintain Old Debt Records
Retaining records of past debts and active older credit accounts can significantly affect your credit score. Chartered accountants can exhibit their reliable payment history and positively influence their credit scores by maintaining old debt records and keeping older accounts active.
Chartered accountants can increase their credit scores by diversifying their credit options and including a mix of long-term loans such as mortgages or car loans.
Limit Hard Inquiries
Every time you apply for a loan or credit card, lenders examine your credit score and credit history. This examination is known as a 'hard inquiry,' which is recorded by the credit bureaus. Multiple loan applications leading to numerous hard inquiries can negatively affect your credit score.
To mitigate this risk, it is advisable to limit the number of loan or credit card applications you make. Instead, apply for loans only when necessary and when you are confident about securing them. To remain safe, go for a credit report download to check your credit score and if you identify a poor credit score, avoid loan applications.
Be Wary of Being a Co-Applicant
While applying for a loan as a co-applicant may seem worthy, you should consider the potential risks involved. If the main applicant defaults or delays repayments, it can severely affect your credit score.
Chartered accountants must be cautious when opting to be a co-applicant and thoroughly assess the repayment capabilities of the main applicant. Consider the potential consequences before becoming financially linked to someone else's loan.
Why Is Credit Score Important for Chartered Accountants?
Understanding the importance of a good credit score is crucial for chartered accountants, as it impacts various aspects of loan applications:
Creditworthiness: A good credit score reflects your ability to manage finances and repay loans on time. Lenders evaluate your credit score to determine the various loan terms they should offer you.
Interest Rate: A high credit score raises your credit quality, leading to lower interest rates on loans. On the other hand, a poor credit score may result in higher interest rates, making loans more expensive.
Loan Amount: Your credit score determines the amount of money you can borrow. With a favourable credit score, lenders are more willing to extend larger loan amounts to chartered accountants.
Flexible Loan Tenure: With a satisfactory chartered accountant credit score, you can opt for longer loan tenure, making it easier to manage monthly EMIs (equated monthly instalments) comfortably.
Use the Above Ways to Increase Credit Score and Secure a Loan
As chartered accountants, you must keep checking your credit scores on the official websites of credit bureaus or on Shriram Finance for free.
Pay bills on time, maintain a good credit utilisation ratio, monitor credit reports regularly, avoid unnecessary credits, and diversify the credit mix. These tips can help increase credit scores for chartered accountants.
Conclusion
There are several steps to increase credit scores for chartered accountants. A high credit score not only improves the chances of loan approval but also results in lower interest rates, higher loan amounts, and flexible repayment tenure.
At Shriram Finance, we understand the significance of a healthy credit score in securing loans. Our diverse range of credit solutions, including free credit score checks, loans and fixed deposits, cater to the financial needs of chartered accountants and individuals from different professional backgrounds. If you need a personal loan, check the details and apply here.
Key Highlights
- Repay outstanding debts and avoid paying just the minimum amount due.
- Limit credit utilisation within 30% of the available limit.
- Use credit judiciously and close existing loans before applying for new ones.
- Maintain a mix of long-term and short-term, secured and unsecured loans.
FAQs
Why is having a good credit score important for chartered accountants?
A good credit score is important for chartered accountants as it reflects their financial stability and ability to manage loans. It determines interest rates on loans, loan amounts, and flexibility in loan tenure.
What are some specific steps chartered accountants can take to increase their credit score?
Chartered accountants can improve their credit score by paying their bills on time, avoiding full credit utilisation, minimising multiple debts, varying credit options, maintaining old debt records, limiting hard inquiries, and being cautious about being a co-applicant.
How frequently should I check my credit report as a chartered accountant?
As a chartered accountant, it is recommended to check your credit report periodically to ensure accuracy and stay updated on your credit status. You can access your chartered accountant credit score for free and do a credit report download once a year from the official websites of the four credit bureaus or credible third-party websites like Shriram Finance.
Can my professional status as a chartered accountant affect my credit score?
Your professional status as a chartered accountant does not directly impact your credit score. However, it can indirectly influence your score if you manage your finances poorly or have late payments on loans or credit cards.
Should chartered accountants consider credit counselling to improve their credit scores?
If you face difficulties managing your debts and improving your credit score, seeking professional guidance from a reputable credit counselling agency may be beneficial. Credit counsellors can provide personalised advice and strategies to help you improve your financial situation.
