CREDIT SCORE
WVIRAL BHATT
hen assessing your credit eligibility, CIBIL score is one of the most important factors that lenders check on. Credit score ranges from 300 to 900 with 300 being the lowest and 900 the highest. The score signifies your credit history, reflecting your repayment behaviour that helps lenders get a fair idea to decide on the status of your application. To be able to get quick access to funds, having a good credit score is essential. Here’s how you can increase your CIBIL score.
PAY OFF YOUR LOAN EMIS ON TIME
If you have taken a loan, that is, secured or unsecured one, ensure that you don’t miss out of any of the EMI payments as it can hurt your credit score. This will make it difficult for you to secure more loans in future. If you are unable to pay off your EMI, then it is best that you approach a lender to restructure it. Don’t make too many credit applications becuase if your application is rejected, it will be recorded in credit report.
PAY YOUR CREDIT CARD BILLS ON TIME
Paying off credit card bills on time is good credit behaviour and helps you in improving the score. Ensure that you don’t pay only the minimum dues but pay off the entire due amount.
AVOID TAKING MULTIPLE LOANS
Taking multiple loans shows that you are unable to manage your finances and further decreases the score. Meanwhile, if you are able to pay off the loan EMIs on time, it can boost your score.
MONITOR CREDIT UTILISATION RATIO
Using a credit card to make purchases may help you get cash back and win reward points. However, it is essential that you keep the credit utilisation only within 30 per cent of your credit limit. This can improve the credit score and give lenders assurance that you are not dependent on credit cards for making purchases.
MAINTAIN A MIXED BAG OF CREDIT
There are two types of loans you can opt for — secured and unsecured loan. Too many unsecured loans has a negative impact on your score. Opting for secured loans like home or car loans can help you increase the score.
CHECK FOR ERRORS IN CREDIT REPORT
It is important to note that your financial transactions may not be the only reason for a low credit score. Note the incorrect information present in your credit report and report the same to CIBIL authority to rectify the errors.
OPT FOR LONGER LOAN TENURE
When availing a loan, opt for longer repayment tenure, as it will ensure you get minimal EMIand you would be comfortable to make timely repayments. Your credit score improves if you don’t delay or default EMI payments.
AVOID CREDIT CARD CLOSURE
The age of your credit history matters. If you have an old credit card towards which you have maintained a good credit behaviour, then avoid closing the credit card. Remember, the longer the credit history, the better your credit score. It indirectly increases the chances of getting loan or credit card application approved.
SET UP PAYMENT REMINDERS
Set up your EMI and credit card payment dates in your calendar to pay-off on time to avoid making any default. Being consistent with payments will help you improve your CIBIL score.
MONITOR YOUR GUARANTOR, CO-SIGNED AND JOINT ACCOUNTS
If the primary account holder defaults on his/her loan, then you will be held responsible to pay-off the dues. Your joint account holder’s negligence can affect your credit score, and you will be denied access to the same as and when you need it. Also, you will have to clear the dues if the primary account holder is unable to do so. Therefore, it is best to avoid becoming a co-signer, guarantor or joint account holder for any type of loan or credit card.
INCREASE YOUR CREDIT CARD LIMIT
This does not mean that an increased credit card limit increases your spending cycle. The trick here is that this can help you improve your CIBIL score. Increasing the credit limit will help you keep your utilisation low and by doing that you leave a positive impact on your score.