Improve your credit score: How long does it take?
In India, the most commonly used credit score system is the CIBIL (Credit Information Bureau India Limited) credit score. Your credit rating is a three-digit number between 300 and 900. The higher this number is, the better your score. If you’re planning on applying for any sort of loan, the interest rates and the Equated Monthly Installments (EMIs) that you will be paying are affected by your credit score.
It can take anywhere between 18 months to 3 years of using your credit to get a satisfactory score. The most important thing to realise is that there is no quick fix to raise credit score quickly. It takes time and consistently good financial decisions. For example, if you try to vastly improve credit score in 30 days, you’re only going to see a small effect. On the other hand, if you’re trying to improve credit score in 6 months, you will see a greater effect, and so on.
You will need a credit score of over 750 to get good deals on any loans that you apply for, and you will be eligible for home loans if your credit score is around 700. Bajaj Finserv offers the lowest interest rates in India at 9.85%.
Let’s take a look at the various ways you can fix your credit score.
Pay Off Your Debts
The very first step on the road to improving your credit score is to pay off any debts that you may have. It takes some time to improve credit score after paying off collections, but it will make a positive impact.
Make sure that you never default on any outstanding payments, whether it’s on any loans that you might have, or your credit card debt. You must also ensure that you make your EMI payments on time. Defaulting and late payments affect your credit score negatively.
If you’re trying to repair credit score after foreclosure, you can expect it to take more than a year of sound financial decisions to get there.
Check Your Credit Report
It‘s not uncommon for mistakes to slip into your credit report. Request a free copy and go through it to make sure that everything is in order. If you come across any errors, contest them and get them cleared at the earliest. Fixing major inconsistencies in your credit report might improve credit score by 100 points, maybe more!
Use Your Credit Cards Optimally
A credit card is a great tool that you can use to better your credit score. The most important thing is to pay off your credit card debt as soon as you can. Timely payments will do wonders, and is one of the most reliable ways to improve your credit score. Another tip is to use your credit card regularly for your expenses. As long as you don’t overshoot your budget and can pay off the debt on time, your credit rating will improve.
Credit utilisation rate is the comparison between how much of your credit limit you’re actually using, and what your total credit limit is. The lesser this ratio, the more favourable this is to your credit rating.
Secured Vs Unsecured Loans
A secured loan in one that has some collateral against it. A home loan is an example of a secured loan, and this will have a positive effect on your CIBIL score. An unsecured loan like a personal loan, a car loan, and credit card debt will have the opposite effect.
You will need to balance these two types of loans, and try to take out more secured loans than unsecured loans. For the
Remember, consistency is paramount when you’re trying to improve your credit score. Incorporate all this information into the process and you’ll significantly improve credit score in one year and be eligible for that home loan in no time! You can easily apply online for a home loan with Bajaj Finserv.