When applying for a loan, your credit score has a large impact on the possibility of getting one. If you have too low of a credit score, an application may be rejected outright. Your CIBIL score is especially important if it’s not excellent and you want to improve it. The CIBIL full form is Credit Information Bureau (India) Limited. This blog will discuss how to improve your credit in order to achieve a stronger and better credit score via the steps discussed here.
8 Ways to Improve Credit Score
Pay all your bills on time: Lenders always want to know how reliable and responsible you are, and that’s why your past payment history is usually considered a good predictor of your creditworthiness. So when lenders look at your credit score, it could be negatively influenced if you fail to pay bills on time or if you settled an old account for less than the agreed-upon balance.
Clear all your unpaid dues: The next step is to take care of any overdue credit card balances. It’s important not to spend an amount that you can’t pay off before the due date. Try to get rid of any loan EMIs, as well as those that can damage your credit score. And make sure you’re meeting your loan repayments on time because this will reflect positively on your credit score. It’s also a good idea to have a limited number of credit cards – in case you need to check your repayment track record at any point!
Audit Credit Utilisation Ratio: Using your credit card for all your purchases instead of just cash has many perks. Your purchase history is easier to track and you’ll get a few cash back points or an Amazon giftcard. However, make sure you’re checking your credit utilization ratio to avoid affecting your credit score. Spending within the limit will result in the most positive impact on your score, while crossing the limit will have the opposite effect.
Contact your bank: Contact your bank and ask them what they can do to help! Bank representatives might be able to work out a deal if you provide them with a valid reason why you have been unable to pay on time. They can also offer solutions that will ensure your credit score remains unaffected, so be sure to ask about that too.
Automate your credit card payments in the CIBIL score app: It can be very easy to forget to pay your bills on time. This could lead to a lower CIBIL score. To avoid this, make sure to automate all your payments so that everything is hassle-free and efficient.
Do not abandon your old credit cards: Time makes you apply for new credit cards, and so you might stop using older and more basic cards. You might have even thought that because you’re not using it, you should close the account. However, this will adversely affect your credit score and cause it to fall if you close the old account. It is best to keep using all of your credit cards and keep the CIBIL score app running, even if its just performing transactions so the card can continue operating.
Conclusion
Building a good credit score takes time and effort. It cannot be done overnight or by following any one method. However, if you follow the steps outlined here, you’ll gradually build a decent credit score in the course of time.
While it’s important to know your CIBIL score, it’s just as important to know how to interpret it. A high score means you’re a low-risk borrower and are more likely to be approved for loans and lines of credit. A low score means you’re a high-risk borrower and may be denied for loans or lines of credit. If you have a low CIBIL score, don’t despair — there are things you can do to improve it. Pay your bills on time, keep balances low on your credit cards, and avoid taking out new loans unless absolutely necessary. With time and effort, you can improve your CIBIL score and make yourself a more attractive borrower.
