What is a CIBIL score?
The CIBIL score is a numerical measure of your creditworthiness. It’s a three-digit number that ranges from 300 to 900. A credit score of 900 or higher may qualify you for better credit card and loan offers. A CIBIL score of 750 or more is preferred by most lenders, including banks and non-banking finance firms (NBFCs).
The Credit Information Bureau India Limited (CIBIL), which regulates your credit score, has direct power over your future interactions with lenders and financial institutions. A strong credit score India will ensure that your loan or credit card application is granted without delay, but a negative credit score will jeopardise your current and future opportunities. The major reason we can’t always keep a decent credit score is due to a lack of understanding. We find ourselves in tough situations because of our lack of awareness, especially during challenging times. That’s why we at Bajaj Finserv, compiled a list of five key characteristics that can assist you in building and maintaining a strong financial history.
Do you have a low CIBIL rating? How can one raise the CIBIL score?
Having an excellent credit score pays off. A high credit score can help you receive better and faster loans. A low CIBIL score, on the other hand, might be alarming for those in desperate need of cash; it can have a negative impact on their borrowings.
There are a variety of ways to obtain loans, all of which are based on the size of the loan, or the amount requested by the borrower. However, all banks are now obligated to verify the CIBIL score of all applicants for all credit products, such as personal loans and credit cards. Even though an individual’s CIBIL score is poor at times, there are strategies to increase the score.
How can I quickly enhance my CIBIL score?
But it’s not all doom and gloom. These seven wise moves will help you improve your credit score. You should, however, constantly practise these techniques and maintain track of your Personal Loan EMIs and Credit Card monthly payments. Here are ten easy ways to raise your CIBIL score:
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Make on-time EMI payments.
Always pay on time if you have any current EMI payments or monthly or annual instalments for a running purchase such as a car, smartphone, property, or other large purchases. One of the most important aspects affecting your CIBIL score is on-time repayments. They help to improve your creditworthiness.
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Don’t take out several loans.
One of the most valuable bits of advice is to never take on more than you can handle. Taking out extra loans, unless you have enough means to repay them, may make it difficult to make regular payments. They can also trap you in a cycle of debt, leaving you with little to no money for day-to-day needs.
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Pay off your credit card debt as quickly as possible.
Make sure to pay off any outstanding debts before applying for new credit. Any overdue debts are a sign that you have a lot of other things on your plate. And if your bank or lender notices that most of your income goes toward your current debt, they may conclude that you won’t be able to pay your bills.
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Don’t use up all your credit.
Stick to a credit utilisation ratio of no more than 30% to keep a decent credit score. According to the ratio, you should only use credit up to 30% of your overall credit limit. Making a budget and separating your requirements from your wants is a guaranteed strategy to avoid overpaying.
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Select a longer repayment period.
Always attempt to choose a lengthier loan repayment term to increase your CIBIL score. The EMI payments will be lower and easier to afford if you have a longer repayment term. Your CIBIL score will improve because of these.
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Keep track of old debt accounts.
If you pay off a debt or loan, don’t close it because you’re afraid it’ll hurt your CIBIL score. To CIBIL and financial lenders, paid-off debts demonstrate your ability to repay. They also show you how long it will take you to pay off your debts.
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Establish a credit history.
If you are applying for a loan for the first time, you will obviously have no credit history. As a result, CIBIL will be unable to assess your ability to repay your debt. To create a strong credit score, obtain short or long-term loans and a healthy credit mix.
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Examine your CIBIL score report for any inaccuracies.
Even CIBIL might make mistakes in its CIBIL score reports from time to time. While updating records, mistakes can occur. If you find a mistake, report it to CIBIL right away by filing an online dispute or contacting them. CIBIL is responsible for fixing the situation or at the very least providing a solution within 30 days.
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Don’t make any actions that are risky or surprising.
Banks will always look at where your money goes when you ask for a loan. They may reject your loan application if they see any dangerous purchases or a history of erratic behaviour. Taking advance cash, paying less than what is due, or missing several payments are examples of this.
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Avoid having a shared credit card account.
While there are benefits to be a joint credit card holder, there are also drawbacks. The defaults of a partner will affect you and your CIBIL score, diminishing your chances of acquiring a loan.
Conclusion:
If you want to apply for a loan to fund future aspirations such as higher education, marriage, home ownership, travel, and so on, it’s a good idea to start tracking your payments and, if necessary, improve your financial discipline. These ten actions can assist you in accomplishing the same goal.
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