Maintaining a good credit score with banks and private lenders is important if you plan to take loans in the future. These loans can be in the form of home loans, car loans, education loans, or personal loans and your credit score with credit rating agencies is taken into consideration for approval and sanctioning of these loans. A borrower with a good credit score is always sanctioned loans without any hesitation by the banks who have become weary of giving loans due to rising NPAs because of the economic slowdown during the Covid19 pandemic.
Pledge your FD as security against loan if you want to improve your credit score with credit rating agencies
If you have a low credit score with credit rating agencies due to default on loan payments at some point in time, you can pledge your fixed deposit with the bank as collateral security to improve your credit rating. Anyone can get into a financial tight spot due to factors beyond control like a loss in business, salary cut, or a job loss and the bank FD is a saving grace during the rainy days. Fixed deposit interest rates might be low but lenders consider it viable security to secure their loans against defaults by the borrowers. In the modern world full of desires, everyone has a loan requirement at different stages of life and a good track payment record certainly helps in getting a loan that meets your requirement.
