Credit score is one of the most crucial factors that is considered by lenders for determining your creditworthiness. Thus, maintaining a good score is extremely important for your financial well-being. One of the Indian credit bureaus is Credit Information Bureau Limited (CIBIL) started in the year 2000 and since then it is the most popular Indian agency. CIBIL collates all your credit info sent to the bureau by lenders. Using all such data, the bureau scores your credit history on the range of between 300 and 900, wherein a score of over 750 is looked upon as healthy. This score serves as a quantitative means determining your credibility and is utilized by the lenders and other banks when you apply for the credit or loan. So, what do you do if your credit score is low? With some effort and time, you can ameliorate your score using this method mentioned below. However, before doing this ensure that to conduct a CIBIL score check, you must visit online financial platforms or lending marketplaces. Such platforms contain free CIBIL score calculator i.e., page wherein you must fill out your details to fetch your credit score report.
Form A Credit History –
A common myth among many is that holding no credit whatsoever ensures an excellent score but in actuality, a whopping 30 per cent of the CIBIL score is based on your past credit history alone. Credit history of extreme importance when it is about loan approvals or for availing a credit. It is a good idea to make pals with credit and use the same judiciously.
Pay Your Full Dues Timely –
This is definitely no brainer. Timely bill and loan repayments ensure a good credit history. This is a kind of indication that you pay your loans and bills on time and in full, with zero defaults in repayments. In case you hold multiple credit cards, it is wise to not close any of the cards. It is a good way to add more details to your existing credit history as well as form a positive impact. This said, keep multiple cards with you just if you can repay the bills on time and maintain minimum balance on such cards. Your whole credit exposure makes up 25 per cent of your credit score.
Next pointer, you must note, is to pay your card dues in full. When a credit card bill gets generated, you are generally provided 2 options – to pay the whole amount in a go or pay the minimum amount that is determined by the lender. While you might get tempted to opt for second payment option, note that remaining amount is looked upon as overdue by CIBIL and can impact your credit score.
Apply For The Loan Just When You Require It Absolutely –
Hoarding up loans is not going to do any good to you. It just shows that you are credit hungry and can reflect badly on your history. It is always best to keep number of loan applications to the minimum as possible as the kind of loans you have availed, and its repayment tenures contribute to another 25 per cent of your overall score. You must aim for a balanced mix of credit i.e., balanced mix between secured and unsecured loans in the form of auto loan, personal loan, home loan, etc. with fewer unsecured credit options.
Next good idea is to opt for a secured card that can be availed against cash deposit like fixed deposit that serve as collateral or security. This too is a great avenue to ameliorate your score.
Avoid Impulse Expenditure –
An old but crucial rule is to always think before splurging. Do not just swipe your card to purchase any cool gadget that just came up in the market. Take you time to think and plan your expenses. While it is crucial to ameliorate your score, note that it is a steady and slow procedure. This would take nearly a year’s worth effort on average to view the efforts in your report. Ensuring a good credit behaviour and CIBIL score can assist you to ease your financial frets and is for sure worth all your time and effort.
Also Check: Experian Credit Score
Read On To Know Some Of The Effective Ways To Repair Your Score –
Check Up Your Credit Report
One of the crucial things you must do is to ameliorate your score. Doing so will assist you to identify the errors in your credit report. If you figure out any mistakes in your credit report, then you must ensure to get the same corrected as fast as possible. As the score is computed depending on the info mentioned in the report, it is crucial for you to make sure that this report is totally free of mistakes or errors.
Pay Your Outstanding Dues
In case you hold any outstanding credit card dues or loan EMIs, you must ensure to repay them instantly to repair as well as ameliorate your credit score a little. Your payment history is one of the crucial parameters that is factored in while computing your score. If you hold a history of missed payments, then your credit score may be low. Thus, it is a great idea to ensure to activate your payment alerts so that you never miss out on your credit card due and EMI payments on time. Also, you must avoid paying just the minimum due amount on your card always as it enhances your outstanding due on your credit card. Try to pay full dues to keep your outstanding bill low.
Keep Your Credit Utilization Ration Within 30 Per Cent
It is a crucial parameter that is factored in while computing your score. The credit amount that is available to you vs. how much of the amount you may be using reveals your dependency on the credit money. It is recommended that you as an individual must keep your credit utilization ratio below 30 per cent. So, if you hold multiple cards, keep checking on the amount you are utilizing as credit.