A good credit score is a much-needed aspect when looking to obtain a loan. Financial crunches can crop up at any point in time and one may feel the need for money to cater to varied needs. It is at this time that a personal loan or quick loan can come in handy. However, possessing a good CIBIL score is mandatory in order to ensure that you can get your loan approved without much hassle.
CIBIL score is the score that depicts your credit history and is dependent on a number of factors such as your repayment history, the number of unsecured loans you have, non-repayment history among others. The ideal CIBIL score is 750 and often those with lesser Credit scores find it difficult to obtain a loan when they need it. Therefore, in times when you are in dire need of money, you may be faced with the dilemma as to “How to improve my CIBIL score?”
Even though your credit score may not be at level, there are ways you may adopt to improve it. Read on to know more about how to improve your CIBIL score.
One of the major causes of lower credit scores is the delayed payment of your credit card bills. Hence, one of the first things to do is to pay your credit bills before the due date so that they do not end up with increased interest rates. If you are someone who tends to forget, set reminders that would remind you to repay your bills on time. Automated systems are also helpful in ensuring that your loan repayment amount or EMIs are deducted from your bank every month automatically.
Unsecured loans comprise credit cards and personal loans, while secured ones encompass home and auto loans. Credit-lending companies prefer offering loans to individuals with secured loans than those with unsecured loans. While the latter comes in handy in different situations, it is worthwhile having at least one secured loan along with the unsecured loans that you may need to cater to varied financial requirements. This boosts your credit score automatically.
At times, even after closing a loan, the bank may not have issued a No Objection Certificate which is evidence of your loan being closed from your end. In that case, your loan repayment schedule may reflect as ‘ongoing’ and you may be shown as a current customer. This may affect your Credit score just like many other suspicious activities which you need to keep reviewing from time to time.
It is always advisable not to reach the maximum limit of your credit usage as this has a negative impact on your CIBIL Score. If you feel your expenses on credit cards are more, it is better to customize the limit in sync with your predicted expenses.
Taking too many loans simultaneously only labels you as ‘a borrower who does not have enough funds and may turn out to be a defaulter while not being able to manage them all at once’. It is therefore better to take one loan at a time and pay it regularly to improve your CIBIL score.
When taking a loan, opt for longer tenures. This will ensure that you have more time to pay your dues off and the installment amount will also be lower, thus making it easier to repay.
Having loans and credit cards in your name does not affect your credit score negatively. That is, as long as you know how to use it prudently and maintain your repayment record in a disciplined and organized manner. Once your score reaches a good level, you will be in a position to acquire the right loans easily to meet your financial requirements.
Being in debt does not mean a negative thing- financial crunches are natural. It pays to know the right ways to make the best of your loans and credit cards in order to maintain a good CIBIL Score.
[Also Read: What is Pre-Approved Home Loan? ]