Great Ways to Improve your Credit Score in India
Credit score is an algorithm based calculation that gives you the score based on the history of your credit and whether you adhere to the principles of CIBIL Score improvement. This helps the lender decide how creditworthy you are when it comes to repaying the loans or the dues on your credit card.
There are a few companies that do the job of collection and maintenance of the various records of payments made by individuals that is related to loans or credit cards. CIBIL was the first company of this kind to establish itself in India which was followed by Equifax, Experian and Highmark. Using both the quantitative and qualitative measures, these companies accumulate data in relation to your credit history and prepare your credit report. The qualitative measures are affected by subjective factors like Conditions, Capital, Character, Collateral and Capacity while quantitatively the main factors are the institutes that had financial transaction history with you such as the credit card companies and banks.
With the increasing number of checks done before the sanction of every loan, one might worry how much credit score is needed to apply for a Home Loan or any other loan for that matter. Let these insecurities not bother you anymore. There are definite ways to raise your credit score once you understand the concept behind the same.
How to Improve CIBIL Score:
- Understand Credit Score: Do you know that every credit payment you make or don’t make leaves behind a financial footprint and this reflects in your Credit Report? Read our Financial Fitness Report to understand your credit profile and take positive steps towards getting the loans you apply for and saving money on credit cards/loans to live a richer life.
- Check your credit report:
Request your credit report copy from the lender and get it thoroughly checked, particularly for incorrect listings of any kind of late payments for your respective accounts. Rectify the incorrect ones without delay.
- Pay bills regularly:
Always pay your bills on time since the history of payment on your credit health report is equal to about 35% of the total score you achieve. It is good to remember: Prevention is better than cure.
- Pay off debts:
Even if you are indebted to someone for a small amount of money, do not drag the tenure on and on. It is very important to get rid of your debts as soon as possible. It will drastically increase your credit score.
- Reduced usage of credit cards:
Reducing the use of your credit cards will prove to be very effective in improving your credit rating.
- Hold fewer credit cards:
You must avoid the possession of too many credit cards in order to improve poor credit score quickly.
- No defaults in credit card:
Try your level best to maintain your credit card balance in an efficient manner. It will be wise of you to clear off the dues that are closer the credit limit of your credit card.
- Pay EMIs on time:
Get your EMIs paid on time. Punctually paying off your current loans will help you in improving your credit score.
- Unused credit card accounts shouldn’t be closed:
If you cancel a credit card it leads to a poor credit score at the end of the day. The best way you can tackle this is by using your old credit cards infrequently in order to prevent bad reports from the issuer to the credit bureaus.
While you may not want to load yourself with a number of loans against your name, some loans become a necessary aspect to life, which makes building and maintaining a high credit score imperative. Use these simple tips to rank high in the CIBIL calculations.