Cibil score is an essential factor when you apply for a loan, or if you want any other banking facilities. It is best to apply for a loan or other credit cards after you have improved your score. A good cibil score may help you in getting quicker and better investments. A low cibil score can be horrifying and awful for the borrowers in urgent need of money. CIBIL (Credit Information Bureau India Limited) is one of the prominent and leading credit agencies in India.
A decent credit score will give you a more significant loan amount at a lower interest rate, and a score above 700 is considered as an excellent cibil score. But low CIBIL score should not be a matter of concern when you keep regular track of your loan EMI’s and monthly payments of credit cards. You can quickly improve your credit score by taking smart moves towards your financial products.
Ways to determine a credit score
There are different ways by which we can evaluate our credit score. Some of these ways include Payment History, Amount owed, length of credit history, new credit, and types of credit that are used.
In this article, we’ll share some tips that will help you in improving your credit score:
Pay dues on time- Always remember two rules for improving your credit score-
Never miss any EMI’s and never delay your credit card bill payments. Your monthly payments with outstanding debts can create a significant impact on your CIBIL score. Delays in credit card bills and EMI’s not only charge you the penalty but also result in bad credit score. So, if you want to improve your CIBIL score pay your dues and EMI payments on time. Use online applications to let bills generated automatically on time so that you won’t miss any deadlines in the future.
- Clear all your existing debts- It is better to clear off all your current debts if you want to have a good credit score. Having any outstanding debts is noted on your credit report, it will create a negative impact on your CIBIl score until you repay the debts. It is suggested to repay your outstanding debt within the time chosen and also make prepayments to foreclose any loan taken. So, it is vital to clear all your existing obligations to boosts your cibil score.
- Use credit sensibly- Utilising more than the credit limit creates a negative impact on the lenders; it is also essential to use credit only as much as you can pay. To maintain this, ensure to use credit usage not to exceed half of the amount from your income. You can smartly take a step forward to pay your full balance on time and use your credit card up to the limit.
- Review your credit report frequently- Always try to monitor your credit score and report for any discrepancies in your CIBIL report. Sometimes, CIBIL authorities may make mistakes while updating your credit report or may integrate incorrect information in your story. If you notice such inconsistency, you may report instantly to the authorities.
- Boost your credit history gradually- When you take a loan, it is better to have a longer tenor on the lower interest rate, which will provide you with low EMI payments. You can also increase the limit of a credit card, but that doesn’t mean that you are going to spend more cash flow. The pro tip is to have more credit limit with low utilization to improve your credit score.
Generally, it takes four to thirteen months to improve your credit score, but it also depends upon the borrower’s situation. All you have to do is use credit prudently, have patience, and act steadily while taking a loan or spending money.
- Don’t close the unused accounts
Well, this happens with a lot of people. Many times, there are various credit cards that we don’t use. This means that it does not cost us any money. Closing an account is not considered to be variable as it reduces the credit utilization ratio. On the other hand, keeping the mind open is considered to be a smart strategy.
- Don’t apply for too many new transactions
Using a new credit card can create a lot of burdens. Also, the act of raising new credit can lead to a hard inquiry. This can create a negative impact on your credit score. Be careful before making an original transaction.
- Inculcate good financial habits
Conducting an excellent economic habitat can be considered as a viable option. The small essential improvement in your plan can lead to significant changes. We must maintain an emergency fund, regularly paying, savings, and keeping a financial diary. Having a daily record would also reduce the chances of missing the payment. This way, we can rebuild our credit and also create a better credit history.
- Let the old debt stay on your report
Many people hold a thought that their old debt is considered harmful for them. Even though we are not using our old credit cards, they can still help to improve the credit score.
The total number of transactions, longevity are the factors that help to display a good credit history. The more information enables better image in front of lenders. This will also increase your creditworthiness.
Indeed having a good credit score is essential to have a secure financial life. Availing and processing of the loan are very easy. Also, while you have to pay rent or sell your phone, any investment can be made easy by having a secure credit score.
It can take several weeks to improve the credit score. It can also be stretched to months. The best advice is to start as early as possible. Slowly, and steadily there will be change.
A good credit score can help you to lead a hassle-free and stress-free life. As we have a health goal, a career goal. Similarly, we can also set a goal to improve a good credit score. One small change will directly lead to a positive result in our financial life.