People, irrespective of the social and economic background, have varying financial requirements. To meet such needs successfully, they take loans. Most banks, non-banking financial companies, and several other financial institutions approve loans right away when an applicant has a good CIBIL score. It is crucial to know the effective ways to improve CIBIL score to ensure that banks or NBFCs do not refrain from disbursing loans.
Before applying for loans such as home loans, car loans, education loans, or short-term personal loans, it is essential to ensure that you have a good credit score. Lenders decide whether to approve an individual’s loan application and grant the requested loan amount entirely based on the CIBIL score. Checking this particular score gives them a clear idea about an applicant’s credit health, credit history, and timely loan repayment ability.
You may not get loan approval even when you have an urgent requirement for money if you have a significantly low CIBIL score. Whereas, with a good Credit Information Bureau of India Limited (CIBIL) score, you will certainly get loans and credit cards easily and that too at low-interest rates. It is imperative to know the best ways to build up credit score so that banks and financial institutions never hesitate to approve and disburse loans.
Why Does a Higher CIBIL Score Matter?
Aside from being the first, CIBIL is also one of the most reliable credit bureaus in the country. In comparison to other credit bureaus functioning in India, CIBIL’s accuracy level is much better. Therefore, more or less, every reputed bank, NBFC, and financial institution relies on the CIBIL scoring method and checks the CIBIL score before approving and granting loans to applicants.
No matter how much smartly one manages his or her finances, applying for loans is the only sound option when financial emergencies arise. It is paramount to have a good CIBIL score to quickly get the money you need without any hassle whenever such an emergency emerges. Ensure that you repair credit score every time it goes down.
All financial institutions disburse loans at a lower interest rate if the applicant has a higher CIBIL score. However, such institutions do not approve loans at all or grant loans at a higher interest rate if an applicant has a lower CIBIL score. Here’s why maintaining a good credit score matters.
Quick Credit Approval
Purely based on an applicant’s credit score, banks and non-banking financial companies approve credits. You can drive fast credit approval with a higher CIBIL score.
Lower Rate of Interest
Banks and NBFCs approve and grant loans at a lower interest rate to applicants with a higher CIBIL score. Make sure that you choose a reputed company to get valuable credit improvement services and free online credit counselling services.
Multiple Credit Card Offers
To receive a wide array of credit card offers from different companies, you need to focus on improving your credit score and maintain the same.
7 Result-Driven Ways to Improve CIBIL Score
Obtain Highly-Secured Credit Cards
One of the best ways to better your credit score is obtaining secured credit cards. Banks issue such credit cards against Fixed Deposit (FD), and these do not pull a strict inquiry on an applicant’s CIBIL account. Nothing much you need to do to ensure that your credit score notably rises within a year other than properly using highly secured credit cards.
You Must Keep Credit Cards Active
To repair credit score, it is of utmost importance to keep all your credit cards active. To ensure that CIBIL can easily gauge the credit card handling capacity of yours, you should use your car at least once a month. CIBIL considers your credit cards as active when it finds that you have charged a minimal amount on your card and pay back the entire amount within the due date.
Rectify Mistakes in CIBIL Report
To ensure that your credit score doesn’t go down, it is vital to check the CIBIL report from time to time for mistakes and rectify those without any delay. While updating records, many times, CIBIL mistakenly notes wrong information against an applicant’s CIBIL report. Sometimes CIBIL also takes too much time to record details. Checking the report often will help you find mistakes and resolve the same quickly, which will eventually help you increase your CIBIL score.
Do Not Exceed the Credit Limit
It is crucial to ensure that your expenses should not exceed the credit limit. Those who are vigilant about staying within 30% of their credit limit successfully prevent their credit scores from going down. Just keep in mind while using a credit card that the outstanding amount should not surpass the credit limit. Know what happens when one tries to go over the credit limit.
If you know beforehand that your expenses might exceed the credit limit, the prudent step is to pay your credit card account in advance. Such a step will ensure that you stay within 30% of your credit limit.
Timely Repay Outstanding Debt
Know that an individual’s capacity to repay outstanding debt affects the credit score. Hence, it is essential to pay EMIs timely. If you delay paying your monthly instalments, you will have to pay the penalty, and your credit score will come down. Even if you avail of credit improvement services, it is critical to set a reminder for timely payments of EMIs.
Maintenance of Older Credit Cards
Know that as long as you can pay the entire bill amount on time, you should keep on maintaining old credit cards. Doing so will help you create a substantial and lengthy credit history, which ultimately will enable you to improve your CIBIL score successfully. You should know the reasons closing a credit card could adversely impact your credit score.
Choose a Wide Range of Credit Types
To repair credit score, it is paramount to choose and borrow an eclectic mix of credit forms, which helps you create a significant credit history. If you take such a wise step, you will surely get approval for higher personal loans at a lower rate of interest.
Besides investing in top-standard credit improvement services, it is imperative for every responsible individual to follow the aforementioned ways to improve the CIBIL score fastest. With a higher CIBIL score, you will get quick approval for loans every time, and that too at remarkably low interest rates.