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On-time payments play a critical role in building a good credit score. Payment history is one of the most important factors that credit bureaus consider when determining your credit score. Late payments can have a negative impact on your credit score and can stay on your credit report for up to seven years.
When you make on-time payments, you demonstrate to lenders and credit bureaus that you are a responsible borrower who can be trusted to repay your debts. This, in turn, can help to improve your credit score and make it easier for you to qualify for loans and credit cards with better terms and interest rates.
Here are some best practices for making on-time payments:
Set up automatic payments: Many credit card issuers and lenders offer the option to set up automatic payments, which can help ensure that you always make your payments on time.
Use reminders: Set reminders for yourself to make payments, whether it be on your phone, calendar or sticky note, so you don’t forget.
Pay more than the minimum: If possible, try to pay more than the minimum amount due each month. This can help to reduce your overall debt and improve your credit score.
Pay on time even if it’s just the minimum: Even if you can only afford to make the minimum payment, it’s still important to make that payment on time.
By making on-time payments, you can demonstrate to lenders and credit bureaus that you are a responsible borrower and can improve your credit score over time. Remember, late payments can have a significant negative impact on your credit score, so it’s essential to always make your payments on time.