Credit score is a crucial factor that banks consider when deciding on loan approvals. A high credit score not only makes it easier for you to access loans but also potentially secures better interest rates. This article will help you understand the role of credit scores and how to improve them to increase your chances of successful loan applications.

Credit score is an index that indicates a borrower's creditworthiness and credit history with banks and financial companies. This index is managed by the Vietnam National Credit Information Center (CIC) and is calculated and evaluated according to international ranking rules and standards.

Credit score is composed of 5 main components including:

Debt payment history (35%): Debt payment history shows the customer's loan process through payment on time or late, whether the debt is paid in full or not,...
Credit debts (30%): This factor reflects customers' debts and credit debt ratio over time.
Time with credit history (15%): Calculated based on the total time customers participate in the credit market.
New credit (10%): Raising new loans affects an individual's credit score, especially opening many cards or loans in a short period of time.
Form of credit (10%): This is all information about forms of personal credit used including consumer loans, home loans, credit cards,...

The bank relies on the customer's credit score to determine whether the loan meets the conditions. To improve credit score, customers can apply a number of ways such as:

Do not spend more than you can afford, do not use more than 30% of your credit limit.
Pay your debt on time, pay off your debt in full every month.
Avoid opening many loans in a short period of time because it can reduce your credit score.
Regularly check your credit file and make adjustments when necessary.

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