How to build a strong credit score? Here are 5 smart ways

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financial security. So, what is a credit score, and how can you determine whether you have a good credit score? A credit score, typically ranging from 300 to 900, is a numerical indication of a person's creditworthiness. Your credit score is a tool that banks and other financial organisations use to assess your creditworthiness and ability to make on-time loan repayments.

So, if you are looking to buy a new home, apply for a new credit card or buy the latest gadget on EMIs, it's your credit score that will determine whether you are eligible for purchasing any of these products on a loan or not. Credit scores are sometimes also used by certain organisations as part of their employment checks to understand the financial behaviour of an incoming employee. Now that we have understood the basics, let’s understand the importance of a good credit score and how to maintain it.

A healthy credit score can open up multiple doors for you when it comes to credit products. A robust credit score is a financial asset and will open doors to numerous opportunities. As a gatekeeper criterion for lenders, your credit score significantly influences your eligibility for loans and showcases your financial discipline.

A strong credit history and a consistent track record are the most important factors that determine your credit score, and should ideally be above 720. A higher credit score signifies a lower level of risk for lenders and translates to better terms for borrowers. Establish a strong credit foundation: For those just starting, or rebuilding their credit history, it's essential to establish a strong foundation.