Having a loan or credit card gives your dreams the wings they need to become a reality. But they are not accessible to all. Yes, you read it right! The lack of a good credit score often leads to a disapproval of a loan or credit card for most. A credit score is all but a very important thing in the world of credit. The three-digit number represents the creditworthiness of an individual. Credit scores are prepared by several credit information companies such as CIBIL.
You can get Free CIBIL score online and know whether you are the right candidate for a credit or not. The score, which ranges from 300-900, must be 700 and above to get an approval. If that is not the case, you may get denied a credit.
You could ask a question, how to improve CIBIL score, won’t you? Let’s discuss the steps that would lead to an improvement in the same in this article.
Steps to Improve CIBIL Score
Pay Dues on Time – Keep paying the loan EMIs or credit card dues on time to ensure the credit score moves upwards. Try to figure out what leads to a default or delay in the payment. If injudicious spends are a reason, you better be disciplined to save reasonable amount to ensure a smooth repayment.
Keep a Lid on Credit Utilization – A credit utilization ratio indicates the extent of credit utilized to the proportion of limit available. You may be having a greater credit limit but utilizing a heavy chunk of it can deal a huge blow to your credit score. It’s because a greater card spending would raise the bill substantially and thus create the possibilities of default. Fearing such a thing, credit bureaus like CIBIL takes out some of your scores. Keep a utilization ratio of 30%-40% to make sure the repayment history builds while improving the score at the same time.
Debt Settlement – Used settlement to get rid of the debt? If Yes, then the score must have gone down rapidly. So, if you want to repair your credit health, you may have to start with a secured loan or secured credit card. These are offered against collaterals such as a fixed deposit. Around 80%-90% of the fixed deposit can be disbursed as a loan or credit limit. But again, the repayment has to be tidy to repair your credit history.
Don’t Make Too Many Credit Enquiries – Too many credit inquiries can pull down your credit score if faced rejections all the time. So when you are facing rejections, it’s better to skip applications and wait for the time till the score improves.
Know the Root Cause of a Poor CIBIL Score
You should first know the cause of a poor score, whether it’s due to loan default, debt settlement, too many credit inquiries, etc, before taking steps to raise it. You can know that by glancing at the credit report of CIBIL. You can thus visit the website of the credit information company and create an account by mentioning a few personal and credit details. Once the account is created, you can give a request for CIBIL report, which would highlight the grey areas to iron out.