In this post, i will help you to understand the simple steps on how to improve cibil score.
Credit Score is a report used by lending agencies to check the credit history of an individual. A credit score is a three-digit number that indicates the ability of the repayment.
In India, Banks and Lending Agencies use CIBIL as credit rating agencies. The CIBIL score evaluates the creditworthiness of the individual. A score of 700+ Considered as excellent,
If the score is below, 700 will face the problems while applying for Personal Loans or credit cards.
Causes of Lowest Credit Score
- Delay in payments
One of the primary reasons for a lower credit score is missing a payment. Delay in payments and a minimum payment of credit cards will cause you to lose in the CIBIL score.
- Utilizing of highest amount from Credit Cards.
If all your credit cards consolidated utilization by more than 40%, it would affect CIBIL. It will consider that the individual is going to debt.
- Applying for multiple loans or credit cards.
- Wrong Entries in CIBIL
There are chances for incorrect entries in your credit report. A lending agency may search for your CIBIL report without your consent.
How to Improve CIBIL Score Faster?.
It is possible by following the below simple steps. It would be best if you were organized and disciplined.
- Step1:- Ontime Payments.
If you have money in your hand or bank, even missing the payments or paying late also treated as same. Create reminders for the payment dates. Nowadays, every android phone has the feature to set a reminder to activate it or create a reminder in google calendar that will send you the reminders.
Late payment of EMIs and Credit cards will cause you to pay the penalties and late payment fees.
Use the automated services that will pay the bills on time so that you need to worry about the payment deadlines.
- Step 2:- Avoid taking too much debt:-
Too much is always not right; it is advisable to ignore taking to much debt at one time. Applying for multiple loans or credit cards for a specific period should be minimal. To keep your credit score healthy first repay the loan and go for another.
If you are seeking funds from the different sources at the same time, it will reflect that you are running with insufficient funds.
- Step 3:- Maintain Credit Mix
Your credit score must contain the healthy credit mix. It is suggestible to have the right combination of credit mixes such as secured loans (auto loan, home loan), unsecured loans (personal loan, credit card). Having multiple loans for short and long tenor can boost your credit score.
If an individual has more unsecured loans will be treated negatively.
- Step 4:- Maintain Balance in Credit Cards.
You are obtaining more than 40% of the sum amount of all the credit cards. IT will impact on CIBIL to improve the 40% dont go for a new credit card. Contact the credit card issuer to increase the credit limits.
- Step:5:- Keep an Eye on your Credit Score
check your credit score at least once for three months. If there any wrong entries in your report, rectify immediately.
Some times a loan you repaid will not show in the report due to this your credit score impact negatively.
- Step 6:- Monitor your Co-signed and Joint Accounts.
For Co-signed, guaranteed, and jointly held accounts, you will treat as equal liable. With the negligence of the guarantor or cosigned missed the payments, your loans might get rejected.
It is advisable to not to become a guarantor or cosigned.
- Step 7:- Payoff your Card or Balances with Personal Loan.
If you have too many credit cards, it will difficult to remember the payment due date for each card. By closing all the cards with the personal loan can help you to escape from the confusion, but it is advisable to close the newest credit card closing an old credit card will impact on CIBIL.
- Step 8:- Avoid Cash Withdrawals.
If you withdraw cash from the credit cards, the rate of interest will start from the day in which the transaction occurs, when it comes to retail transactions banks gives 20-25 days without including any interest amount.
With this, the bills rise more due to advances, and the score goes down.
You must remember that the excellent credit score lies in paying off the loans and card dues. For on-time payment, you must control your spendings.
Tightening your spends will help you to pay off more debt. With the regular payment of the dues, your credit score starts rising.
I am Ram, I have completed Master of Commerce, I am Finance writer and Personal Loan Advisor in Personal Loan Xpress. I love to write finance articles and i consult the people regarding their financial decision with my Expertise.