Wondering how you can improve your credit or CIBIL score? Read on.
This 3-digit number can be a deciding factor in your loan eligibility and the amount you can borrow. Considering its significance, it becomes necessary to maintain a healthy score for easy loan approval. So, here are some dos and don’ts for boosting your credit score.
#1 Pay your dues on time
Whether it is your credit card bill or your loan EMIs, make sure to pay them timely. Missing even a single payment can have an impact on your record. Having a history of timely payments is the best way to maintain a healthy credit total.
#2 Limit credit utilisation
Credit utilisation is the percentage of the total available credit card limit in a month. For an improved credit score, it is advisable to keep this ratio to 30% or less. Spending more than the ideal limit shows that you have a high dependency on credit, which can be considered risky by the lenders.
#3 Check your report regularly
It is also important to check your credit report regularly to keep track of the changes and rectify any errors timely. Any error or incorrect details, such as mistakes in personal information, wrong loan amount, etc., can affect your report negatively. So, make sure to perform a credit score check online before applying for a new loan.
Additional Read: 5 Financial Steps to Bounce Back from to Maintain Your CIBIL Score
#4 Maintain a balanced credit mix
You can consider having different types of credit, such as secured and unsecured loans of short and long terms and secured credit cards, etc., in your portfolio. This shows the lender enough credit history and also establishes you as a credible borrower. However, you shouldn’t get unnecessary loans or credit cards only to maintain a credit mix.
#1 Apply for unnecessary credit
Having multiple applications in your name in a short duration can negatively impact your credit history. Every application for new credit creates a hard enquiry in your credit report. This can harm your credit score. Thus, it is vital to limit your enquiries and apply for loans only when needed.
#2 Close old accounts
Since your credit total reflects your past credit activities, closing old credit accounts can adversely affect your average age of credit history. Having a longer credit history with timely repayments can improve your credit score and help secure loans in the future easily.
#3 Apply for more than you can afford
Apart from your CIBIL score, lenders also assess your income capacity to make sure that you can repay your debt on time. As a result, if you apply for a loan amount higher than you can afford, it will impact your credit history and lower your chances of getting a loan.
Over to you
Improving your credit total may seem like a demanding task, but it can be achieved easily with proper planning and discipline.
Planning to apply for a loan? Visit our website and get started today! Begin with performing a credit score check online with Tata Capital.