Individuals are becoming aware of the importance of holding a good credit score to improve their financial outlook. Most lending institutions check applicants’ CIBIL scores to assess their loan repayment credibility. Hence, it is essential to possess an ideal credit score to enjoy loan and credit card approvals at favourable terms. You can thus adapt several financial disciplines that can help you improve your CIBIL score over time. Availing a small personal loan from a lending institution and paying the EMIs in time can be one of them.
Credit scores are 3-digit numbers that range from 300 to 900, with 750 being the standard acceptable value for most lending institutions. Major factors that determine this score include the likes of payment history, credit utilisation ratio, credit mix availed, etc. Hence, the tips discussed below will help boost your credit score significantly over time.
Ways to Improve your CIBIL score
In case you hold a poor CIBIL score based on your past credit behaviour, you can adopt some essential measures to rebuild the score.
- Timely repayment
Lending institutions assess your credit report and based on your past payment history, they determine the risk involved in lending. If your CIBIL score is getting you down, paying all fixed liabilities in time as per the terms agreed upon can leave a positive impact on the score. Whether it’s your credit card bills, loan EMIs, or any other financial liability, timely payment is the key to build your credit score, although it might take some time.
Maintain an excellent credit utilisation ratio
The ratio refers to a percentage of credit utilised with respect to the total credit limit available. If you maintain a proper credit utilisation ratio, it significantly helps in enhancing your CIBIL score. A low credit utilisation ratio indicates that you have not maxed out the credit limit, thereby letting financial lenders know that you can manage credit.
Do not apply for multiple credit cards or personal loans simultaneously
Borrowers often have the tendency to apply for multiple credit cards or personal loans after a rejection. It is, however, not a practice appreciated in the lending market. Each time you apply for a loan, it creates a hard enquiry on your credit report. Too many such enquiries thus negatively impact your credit score. Also, the enquiries remain on your credit report for at least two years.
Hence, while trying to improve your credit score or while rebuilding the same, it is ideal to avoid too many hard enquiries.
Check your credit report for inaccuracies
Closely monitoring your credit report can help you identify inaccuracies. If you see that you hold a poor CIBIL score, the first thing you should do is check the credit report properly. For that, you need to know how to check the free CIBIL score for analysing all recent updates. You must cross-check all details and ensure that records listed on the report are correct. In case you find any discrepancies, you must get the dispute resolved at the earliest.
Maintain a well-balanced mix of credit
Instead of using a single credit type, maintaining a balanced mix of secured and unsecured advances, and making all payments in time can help enhance your CIBIL score early.
Further, availing such advances and making timely repayment will assist in enhancing your credit score. Nevertheless, when applying for an advance, make sure to check its specific score requirement; like, the standard CIBIL score for a personal loan is 750. Lending institutions like Bajaj Finserv also offer personal loans at attractive interest rates to make repayment affordable.
Apart from that, the lender also extends pre-approved offers that make financing hassle-free and time-saving. Such offers can be availed on several credit products like business loans and personal loans. Borrowers only need to enter their name and phone number to check their pre-approved offer.
So, the tips and tricks discussed above will help improve your personal credit score, but it takes time to reflect. Nonetheless, when applying for any loan product, individuals must also make sure to fulfil other eligibility requirements to improve their chances of hassle-free approval.