Improve a Bad Credit Score
To issue loans, every bank or NBFC has distinct criteria. The list of qualifications for this can vary. The RBI has now forced financial institutions to review each applicant’s CIBIL score before approving a loan.
The CIBIL score is a credit score that documents all the specifics of a person’s loans and credit cards. The score can vary from 300 to 900. A score of more than 700 is deemed good and a score below this is not considered by the banks. A score of over 750 is very strong and is acknowledged most of the time.
There are a few factors which affect the CIBIL Score:
- History of the payments.
- Amount and duration of defaults or delays in payment.
- For any point in time, the total amount of debt retained.
- The forms of credit used by an entity, such as personal loan, car loans, credit cards, etc.
- Usage of the credit cap, i.e. the amount of credit available which has already been used.
A credit score is really important and if the score is poor, it becomes really necessary. It just can’t be overlooked. In order to get approved for a loan, keeping a good score is very necessary. And it needs to be corrected as soon as possible if the score is still poor. A few fast fixes are available:
Next, if there are any, delete the credit card balances. Keep a balance on your expenses. Using a credit that can be charged in the current billing period to pay just that much. Speak to the bank and try to reach an agreement to close the loan account if there is an outstanding balance.
On credit cards, overdue dues and high balances force the score down. The recovery of these debts would have a beneficial effect on the credit score. And hold just a few credit cards, maybe 2 or 3, if possible. This makes the payments quick to keep track of.
Reviewing the credit report is very important if someone checks a CIBIL score. Report the same with the vendor if there are any inconsistencies so that it can be rectified sooner.
It’s a responsibility within 30 days of being published to fix the difference. When the error is corrected, changes to the credit score will be reflected in the credit report.
It is very important that EMIs are paid on time. In time, the greater the sum of an EMI, the more important it is to be paid off. This is one of the most significant aspects that CIBIL is looking at while rating somebody.
A good score is given by the timely payment of instalments. It is necessary to keep track of the dates of the installments. And make sure the bank account has enough cash for the payment of the installment.
There are very good credit cards to cash in on potential profits. But only if a person uses it in a timely way is it nice. It is not a smart idea to use credit cards for virtually all. Holding the credit utilization ratio up to 30 percent or less is safer. This will, positively, improve the credit score. And hold low monthly balances.
Usually, credit accounts that are not involved are closed down. It’s fine for a poor account to shut down. But it’s not a smart decision to make a decent account shut down. A decent credit card account with a prompt payment that is well handled is a blessing. It provides the CIBIL score with the much-needed longevity.
- Eliminate the balances
- Report Inaccuracies
- Timely EMI payments
- Check your credit utilization
- Keep the good credit card accounts active
If the repayment history is strong, keep the good account for as long as possible.
Ultimately, just bear in mind that credit is fine, but only if it is used wisely or it will kill lives.
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Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.