Top 7 ways to increase your CIBIL score fast
Why do you need a CIBIL Score?
Are you planning to borrow an amount on credit? Do you want it to get processed and approved smoothly? Do you want to attain it at a lower rate of interest? The answer to all of these questions lies in your CIBIL score. The CIBIL [Credit Information Bureau (India) Limited] Score, generally varies from 300 to 900, is a three-digit numeric assessment of your credit history, rating, and report. Typically, 700 is considered a good score and your creditworthiness improve when your score touches 900.
When a specific authority provides you with a credit, the main concern is your credibility which determines your ability to repay the credit amount. Thus, the CIBIL score behaves like a median for such determination. In a way it gives an impression of the lender. The higher the score, the better the chances to get your loan accepted.
Top 7 ways to increase your CIBIL score fast:
Inspecting your credit report: Basically, two things are suggested through such inspection. Firstly, it helps in defaults and delayed payments leading to a low credit score. For a better score, it is necessary to know the lacking end. Secondly, while highlighting the ends of difference, it analyses the reasons behind such default.
It assists in correcting or fixing the credit report. Sometimes there could be errors in your report related to updates of your track record. So, there should be evaluations at regular intervals to rectify such inconsistencies. One can also take notes from the bank or concerned authority to improve the situation.
Sustaining a healthy credit portfolio ratio in lieu of secured and unsecured debts: Secured and unsecured loans are the two types of loans available. If a borrower takes on an excessive number of unsecured loans, banks and financial institutions are likely to adapt it in a way of red signal and may be tempted to reject one’s credit application without hesitation.
To prevent this situation, a borrower can take both unsecured and secured loans, like those for automobiles or houses, which is one of the ways they can learn how to keep their CIBIL scores up in the future. It’s also worth noting that credit cards are a type of unsecured advance.
Discipline in payment of credit: The amount of outstanding debt and the pattern of repayment can have a significant impact on the credit or CIBIL score. This is the reason that one should maintain the timely repayment of EMI or such a loan.
When one delays in repaying the EMI amount, there is the addition of a penalty fee to the actual amount which lowers your credit score. A proper disciplinary schedule shall be maintained. This will initiate the work towards having a perfect repayment history.
Avoid laying hold of too much debt: One of the key notions to be considered is the number of debts a borrower holds. If a person has several debts, then he/she will be held as a credit hungry person and with this it will then bring down the CIBIL score remarkably. The frequency of loans you take out over a set length of time should be kept to a bare minimum. Keep your credit score from sinking by repaying one debt and then taking out another.
Taking many loans at a single time denotes that you are stuck in an unforgiving cycle of limited funds. As a result, the CIBIL score will continue to deteriorate. On the other hand, if you take out an advance and successfully return it, your credit score will improve.
Highlight Good Debt: There is a common belief that if there are no debts in the credit history, it means that it will lead to a good credit score. Without no history of loans, the lender is unable to evaluate the borrower’s capability to repay long-term debt. As a result, one should only use their credit card, when important, or take out a credit if called for, and pay their bills on time. If you have the financial power, apply for a short term credit, it will make payments easier. One thing that must be kept in mind is that old debt accounts which we are not using should not be closed.
As, if closed, it may follow with a low credit score. The credit report should include good debts. They denote that the person has handled the respective debts with proper accordance and agreed on terms.
Increase credit limit: When a customer asks the banks to increase their credit limit, it doesn’t always mean that they want to increase their spending limit. It is not done to create an option to spend beyond the means of the customer. This increase in the credit limit can have benefits on your credit score if maintained wisely. This expands the availability of credit and so the credit utilization shall be kept low to have a positive impact on the score.
The higher your credit score will be if you can limit your credit consumption to the authorized amount. Reaching the limit, on the other hand, reduces the CIBIL score. As a result, customizing the line of credit with the aid of the relevant authority is one of the most appropriate approaches to face such a situation.
Don’t hint towards risk: The credit report identifies threats in a lender’s profile right away. Always remember to pay your credit card bills on time, make lesser instalments on the sum due, and so on. These are the earliest indicators of difficulty in your credit file and stipulate an imperfect liquidity.
Sometimes one of the most appropriate ways to better the CIBIL score is not to do something that would risk it.
As the situation between a borrower and lender involves large sums of money transactions and risk, it automatically creates a need for the concerned lender to determine and inspect the status of the borrower. For this, the CIBIL score is of great importance to the lender and the borrower.