Nine ways to improve your overall credit score

When applying for a personal loan, the importance of having a strong credit score cannot be overstated. If you have a good credit score, according to Credit Information Bureau (India) Limited (CIBIL), your chances of acquiring a loan or credit card rise dramatically by 79%. The CIBIL score starts at 300 points and goes up to 900 points. If one’s credit score is between 750 to 900, it is regarded as an excellent score, and the individual may get the loan they want promptly and at a fair interest rate.

On the other hand, if the score is between 700 and 749, it is considered a good score, and many financial experts believe that the applicant’s application will be accepted.

Anything between 650 and 699 is considered average. In contrast, anything below 649 is regarded as a poor CIBIL rating, which may result in the lender rejecting your application or agreeing to provide you a loan at a very high interest rate. Here we look at nine ways to improve your credit score going forward.

 Pay all of your bills on time

Have you ever been late for an EMI? Have you forgotten to make a credit card payment? Get your act together, then. Payment reminders should be set up, and credit discipline should be practised. Your credit score is heavily influenced by how you handle your debt.

Take on only a small amount of debt at a time

Keep the number of loans you apply for in a particular time period to a bare minimum. To keep your credit score from falling, pay off one obligation before taking on another.

Maintain a balanced credit portfolio

It’s preferable to have a good mix of secured (such as a house loan or an auto loan) and unsecured (such as a personal loan or credit cards) loans with long and short periods to build a solid credit score. A large number of unsecured loans may be seen negatively.

While keeping under your credit limit, apply for fresh credit

You don’t want to give the impression that you’re perpetually short on cash. Apply for new credit only if you require it and can repay it. Your credit score may suffer as a result of having too much debt.

Review your credit report frequently

Check your CIBIL score regularly and report if there are any inconsistencies. CIBIL may make mistakes when updating your records, such as including incorrect information in your report or delaying the recording of data.

Keep track of your co-signed, guaranteed, and joint accounts monthly

In co-signed, guaranteed, or jointly owned accounts, missed payments are held equally accountable. Your joint holder’s (or guaranteed individual’s) negligence may limit your ability to get credit when you need it. Avoid becoming a joint account holder or a loan guarantor if at all possible.

If you apply for a loan and are denied, the information will appear on your credit report

The best course of action is to refrain from applying again and wait for the score to improve.

Use your credit card judiciously

Maintain a credit usage ratio of 30% or lower.

Get a secured card

Your CIBIL score will improve if you obtain a secured card from a prominent bank, such as ICICI Bank, HDFC Bank, AXIS Bank, SBI, or others, and settle the balance on time.