Improving investment abilities by paying attention to the credit score Improving investment abilities by paying attention to the credit score Achi-News

For any potential property investor, the search always revolves around finding and choosing options that suit their available funds and ability. However, there are cases when the need for a loan arises due to a lack of funds. While loans may sometimes be easily accessible, there are times when both banks and non-bank financial institutions reject loan applications. In such scenarios, the investor may still find a good property slipping through his fingers. It is important to recognize that with a slightly higher investment capacity, the returns from investments can also increase significantly. This situation is similar to a thirsty person coming to a well. To achieve this, attention must be directed to one’s credit score and its improvement.

The credit score is a tool that can make you a winner in the investment market. But how does it work? Before we delve into this, let’s understand what the credit value actually is. A credit score or value is a standard set by financial institutions or banks. They assess your sources of income, along with your financial discipline and commitments. This assessment is based on certain predefined criteria. It is not necessary that if you have a good monthly or annual income, your credit score will also be good. It is possible that even though you have a good income, your credit limit may be low. In such cases, your investment options may be limited. To become a savvy investor, it’s essential to pay attention to the key factors that determine your credit score.

The importance of bank statements

A bank statement is a report card that reflects your income and expenses. To determine the credit limit, banks and financial institutions often ask for bank statements from the last six months. This helps them understand a person’s sources of income and spending patterns.

Avoiding cash transactions

If your income comes from a source where you receive cash, you may accidentally make mistakes according to bank calculations. In such cases, opt for transactions such as checks, bank drafts, bank checks or digital payment methods whenever possible. While cash transactions can save you taxes, they can also hurt your precious credit limit.

Financial discipline

Sometimes, a check issued by someone bounces for various reasons. Such information can be obtained from the register or in the bank’s statement. Repeated checks not only indicate a lack of financial discipline but also indicate financial vulnerability. So, take it seriously as banks and financial institutions view it negatively during credit score calculations.

File your taxes

To increase your credit score, it is essential to deposit the correct repayments. If you are a business owner, only your income tax returns can accurately reflect your income. Failure to file returns to the IRS may require Form 16A, but it is based on your declared income. You may be surprised to learn that a good bank statement and accurate tax returns can significantly improve your investment ability by almost tenfold. For example, with a capital of just 200,000 rupees, you can invest up to 1.5 to 2 million rupees. This increased investment ability will undoubtedly increase your returns over time.

Summary

Improving your investing abilities by paying attention to your credit score isn’t just about accessing loans; It is about maximizing your potential in the investment market. By focusing on financial discipline, avoiding cash transactions and ensuring accurate tax filings, you can significantly improve your creditworthiness. This, in turn, opens up a wealth of investment opportunities that were previously out of reach. So, whether you’re a seasoned investor or just starting out, remember that your credit score is a powerful tool that can shape your investment journey and lead you to financial success.

The writer is the founder Homants. Views are personal.

Posted: May 4, 2024, 10:30 am IST