It is in an individual’s interest to fully understand the math around the credit or CIBIL score and how to increase it. After all, your eligibility for credit is determined by your CIBIL score. Generally, those with a credit score above 750 are considered by lenders for loans or credit cards than those with a score below this level. A lender might deny your request or demand a higher interest rate if you have a poor CIBIL score.
You can become eligible for new credit by knowing how to increase your CIBIL score. A low credit score, say between 600 and 650 points, indicates problematic credit behaviour. While applying for new credit, such applicants may face rejection.
Therefore, focusing on your credit profile and improving your CIBIL score is advised to get a favourable loan offer. Yes! It can help if you know how to check your CIBIL score and have a solid determination to improve your scores to become creditworthy.
Here are a few specific steps to help you can improve or increase your credit score:
Clear Credit Card Outstanding balance
Many individuals roll over their credit card balance and make only the bare minimum payment required to avoid paying the late fee. However, many are ignorant of the fact that carrying a balance on their card affects their credit score. The first thing you should do to raise your credit score is to ensure your credit card has no outstanding balances.
Create a solid credit history
Red flags in the credit report leave little room for improvement in the score. While you cannot get rid of the negative information from your credit report, you can certainly create a positive history by taking appropriate steps. Creating a solid credit history will help you in raising your credit score.
While building a positive credit history may take time, taking a personal loan and making timely repayment can help. This will increase your credit score and help you build a good credit history. Your recent credit repayment history is one of the measures to prove your capacity to borrow and repay.
Consolidate debt to minimise your monthly payments
If you have too many loans and credit cards, consider consolidating them and choosing a smaller EMI. You need to close multiple accounts in addition to clearing the card balance. Your credit score will increase if you pay off your credit card debt and repay your loans.
Question the report’s inaccuracies
A low score usually comes from a report inaccuracy or disagreement. You must know how to check your CIBIL score to review your report and raise any errors as soon as possible. Inform the credit bureau if there are any unknown transactions. Do not take unknown hard enquiries lightly. You must act appropriately without further delays, such as blocking the credit card.
You can check your credit report to find out if your name, date of birth, email address, and PAN number need to be corrected. If you find any, notify CIBIL right away. Additionally, inform the credit bureau of any discrepancy you notice in your loan or credit card account. Considering these factors, you can easily raise your credit score in a year, ensuring a speedy approval of your credit application.
You can download user-friendly apps like OneScore that enable you to check your free credit score and credit report every month for free.
Don’t just pay off the loan
As a customer, you can settle the loan and reduce the repayment burden. However, the report also makes a note of this settled account. This is why you should never settle an account; instead, you should refinance and close it.
Improve the credit mix
Applying for secured loans and credit cards can help you balance your portfolio if your credit score is low due to having too many unsecured loans and credit cards. In short, having a mix of different credit types is good for your profile.
Approval for any loan, including a personal loan and a mortgage, depends on the borrower’s CIBIL score. It is now the standard criterion for swift and straightforward loan acceptance by lenders. A higher CIBIL score gives borrowers the flexibility to select a loan tenure and interest rate that meet their needs.
Managing your financial behaviours is the key to improving your credit score. You can improve your credit score by exercising discipline, using credit cards responsibly, monitoring them frequently, and other actions. While none of these actions can guarantee immediate benefits, your credit score will rise gradually if you implement a few.