Check the Cibil
CIBIL Score: How to Determine Your CIBIL Score. How to Raise Your CIBIL Score. What is the most appropriate CIBIL score range? Understand the distinction between a CIBI score and a report.
CIBIL score is a three-digit numerical expression of your repayment and credit profile. The score ranges from 300 and 900. And the closer you’re to 900, the better your CIBIL score will be. An ideal CIBIL score is 750 for getting a loan on favorable terms. If you have a CIBIL score less than the ideal score, you need to take measures to improve it.
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How to Improve CIBIL Score
Do you need help with your credit score? If you want a quick fix for your CIBIL scores, we understand this – and educate you about available options that will help you improve your CIBIL score.
Review Your CIBIL Report and Know its Accuracy
You must ensure that all the information mentioned in your CIBIL report is accurate. Even a minor mistake or discrepancy can negatively impact your CIBIL score.
If you find any inaccurate, outdated, or missing information on your credit report, the best way to cope with it is to raise a dispute. You can file a dispute with Transunion CIBIL and your lender.
This is how you get closer to a quick CIBIL fix.
Note – Getting a CIBIL report does not impact your CIBIL score.
Get a Mixed Bag of Credit to Strike the Perfect Balance
Consider establishing a mix of credit types with your short and long-term loans. This way, you build your credit score and show lenders that you can manage your finances responsibly whether you have your asset at risk.
When someone takes too many unsecured loans, such applicants’ credit profiles might seem negative to the banks, therefore, maintaining a credit mix by borrowing secured and unsecured loans.
Set up Payment Reminders, So No Due Lowers Your Score
Consistently paying loan EMIs and credit card bills on time helps raise your score. And within a few months, you can see a positive impact on your score.
Ensure there is not even a single missed or late payment because this can significantly impact your credit score. To ensure you pay your dues on time, it is best to write down payment deadlines for each bill in a planner and set up reminders on your Smartphone.
You can also consider enrolling for the auto-pay option. This can be done by discussing with the lender or bank from which you have borrowed a line of credit.
Fix Your Credit Utilization Ratio
If your credit card account exceeds 30% of your monthly usage limit, it’s a red flag because of your CIBIL score. And you might not know your score is suffering. Because even if you are paying off your balances in full, it may reflect as outstanding in your credit report.
This happens because your creditor reports the information to the credit bureau once a month, and the maximum utilization of the credit makes you credit greedy. This automatically lowers your score. So, consider using the card when necessary.
Consider Debt Consolidation
If you are having trouble making your payments because of the high-interest loan rates and multiple EMIs, convert your multiple debts into one EMI. This way, you’ll be paying the debt easily. Debt consolidation through personal loans is a good idea to get a low-interest EMI for the payout.
In a personal loan, you can choose your repayment schedule according to your financial capability and pay back the borrowed on your chosen term at affordable EMIs.
The advantage of taking a personal loan to pay off your existing debt is the interest rate; it’s nearly half of what your credit card issuers are charging you.
Pay More Than Once in Your Credit Cycle
Making payments once a month is good, but to have a great CIBIL score pay more than once. This way, you can reduce your debt faster; it also reduces your credit utilization ratio and improves your CIBIL score.
Pay Down “Maxed Out” Cards First
When using multiple credit cards, paying down the card that’s about to max out the limit is advisable. This strategy will help lower the credit utilization ratio and boost your CIBIL score.
Build a Strong Credit Age
A good average credit age would be more than five years. The longer your positive credit history is, the better your credit score.
If your credit history is short, there’s little you can do. One option: Piggyback to be an authorized user on a family member or a friend’s credit card if they have a good and long credit history. However, it’s easier said than done because finding somebody who willingly adds you as an authorized user may be challenging. They would be responsible for any charges you make on the credit card. Another option: Be patient and don’t close any accounts.
A credit report may only show activity three to six months after the beginning date if you have no history. One option to establish a credit history is to take a credit card, make small purchases that you can afford to repay, and pay the balance in full every month.
Remember: Use your credit card wisely. Instead of helping you establish a credit history, a credit card can get you caught in debt.
Maintain Older Credit Cards, and Don’t Close the Ones You Are Not Using
As mentioned in point 7, the age of your credit history significantly impacts the CIBIL score. It reflects your experience in handling credit. If you’re old credit cards, you must maintain them and keep paying the bills on time in full every month. Do not close them, even if you are not using them anymore. If you must close, close the newer ones.
Keeping your old credit cards open helps you build a long and healthy credit history, thus improving your credit score.
Open New Credit Cards Only If You Need It
Think deeply about whether you need to open additional credit card accounts. Having many open accounts, you are not using will only accrue charges while giving you no other major edge if you are working to improve your CIBIL score.
Avoid Applying for Credit Multiple Times, Too Frequently
The lender pulls up your credit report when you apply for a new credit account. Every pull is considered a hard inquiry, which can lower your score temporarily. Refrain from applying for several loans or credit cards within a short time. Keep your hard inquiries to a minimum by shopping around, comparing the offers, and then applying with the lender offering you the best deal.
Choose a Tenure in Which You Can Comfortably Pay the EMIs
As mentioned in point 2, regular and timely payments improve CIBIL scores. So, when borrowing a loan, choosing longer repayment tenure is always safe. This ensures lower EMI, which you can comfortably pay, thus decreasing the chances of defaulting, delaying or skipping your EMIs.
Remember: If you can afford to pay larger EMIs, choose a shorter tenure. Doing so will pay off the borrowed money faster and save on interest.
In short, if you want to improve your CIBIL score, focus on reducing your high outstanding amounts and maintaining a healthy credit history by making timely payments and managing your credit accounts in a disciplined manner. You might not be able to fix your CIBIL immediately, but with patience, consistency, and a little help from Money Tap, you will succeed.