When you are considering a personal loan or any other financial advances, one of the most determining factors is your CIBIL score. The higher your CIBIL score, the more significant is your chance of loan approval. Besides, you will also have the option to negotiate with your lender to avail better deals if you possess a good credit score.
It is thus vital for a borrower to know what is CIBIL score and why is it essential. Your CIBIL score reflects your repayment capacity, promptness towards your availed credit, and your credit behaviour in general.
It’s a 3-digit score between 300 and 900 showing how risky or dependable you are as a borrower. It has a direct impact on your loan eligibility and the interest rates charged. This is why your CIBIL score is crucial when availing credits to a significant extent.
Here Are 8 Such Tactics to Improve Your Credit Score Quickly
1. Make Regular Payments
Repaying your EMIs on time has a positive impact on your credit score. You must make sure that all your EMIs on the existing loans and other dues are repaid well in advance of the due date. This discipline with credit can be best achieved by setting reminders for EMI payments so that you don’t skip any.
2. Build a Positive Credit History by Obtaining Various Forms of Advances
Make sure you have a healthy mix of unsecured and secured credits to build a positive credit history. Availing only unsecured advances indicates your financial instability, and it reflects poor credit behaviour. Therefore, borrow a healthy mix of various credit forms like a personal loan or a housing loan to increase your CIBIL score.
3. Customise The Credit Limit
The credit utilisation ratio has a considerable impact on the CIBIL score. The more you can manage to restrict the credit usage allotted to you; the higher are your chances to improve your CIBIL score. On the contrary, reaching your credit limit produces an opposite impact. Thus, you must tackle this by keeping in touch with your lender and get your credit limit optimised based on the expenses.
4. Maintain Old Credit Cards For Keeping The Credit History
Financial experts always advise that if you have old credit cards, maintain them till you pay all your bills on time and in full. Closing old credit card accounts have a devastating effect on your credit history.
5. Reduce Debt Utilisation
The lesser is your loan amount, the better is your chance to improve your credit score. Try to minimise your usage on the available credit limit. This reduces your repayments you make every month, which in turn, improves the debt-to-income ratio. Having a lower debt-to-income ratio reflects your high income and repayment capability. It guarantees the lender that you will make timely repayments.
6. Avail The Maximum Tenor
When you are obtaining a loan, choose the maximum repayment tenor available. For instance, you can consider availing a personal loan from lenders like Bajaj Finserv who offer an extended repayment period of up to 60 months. This ensures your EMIs are low and you can make repay easily over the tenor. Besides, this minimises your chances of defaulting or skipping any EMIs, which in turn boosts your credit score.
Furthermore, with this loan facility from Bajaj Finserv, you enjoy competitive personal loan interest rate and instant approval with minimal documentation.
They also bring you pre-approved offers that make procuring loans quick and hassle-free. Pre-approved offers are valid on unsecured credits like personal loans, business loans, on secured advances such as home loans, among numerous other financial products. You can check out your pre-approved offer by sharing a few necessary details like your name and contact number.
Besides, they only charge a minimal fee on pre-payment or foreclosure of the loan. Here is how you can apply for a personal loan.
7. Avoid Accumulating Into Too Much Debt
Now, that you are aware of what is CIBIL score and how it affects your score – try to limit your advances in a fixed period. This reduces your chances of defaulting and minimises the impressions that you are credit hungry. On the contrary, if you obtain one loan at a time and repay it on time, this improves your CIBIL score to a great extent.
8. Check The Credit Report For Mistakes
At times, CIBIL might make some unexpected mistakes in updating your credit records or noting incorrect information in your report. This can bring down your CIBIL score. Thus, check your CIBIL report frequently and identify if there are any such errors. If any, submit a CIBIL dispute resolution form. This will improve your CIBIL score.
By now, you have a clear idea of what is CIBIL score and how CIBIL score is important for personal lending. Hence, follow the tips mentioned above to build a positive credit score.