A good CIBIL score can help you in achieving many of your life goals with ease. Whether its that dream house that you have been planning or the dream vacation, you have been coveting, access to credit can ease the process substantially. A bad CIBIL score on the other hand can make access to credit very difficult. But there are ways in which you can improve your CIBIL score and achieve your goals.
Some of the ways in which you can improve your score are
Pay EMIs on time
The cardinal rule of good credit history is to maintain your payments in time. This factor plays a crucial role in your score and any delayed payments adversely affect your score. Make sure that your bank account is funded well in advance of the EMI due date, so that there are no bounces and unnecessary penalties due to the bounces.
Using your credit limit
Use your credit limit on your credit card prudently, because over utilisation or maxing out your credit card month on month can affect your credit score. Also not paying your outstanding due amount every month and just paying the minimum amount due monthly can affect your score. For example, if your credit limit on your card is Rs. 50,000 then make sure your are not spending more than 50% of the same ie not more than Rs. 25,000 on your credit card.
Credit Hungry Behavior
Any credit hungry behavior ie applying for too many credit cards or loans within a short span of time can affect your score adversely. Plan your credit requirements in advance. If you are planning to buy a house, make sure that you don’t apply for any other types of credit like personal loan or car loan in the preceding 3 months, so that getting an approval for your home loan is easier and smoother and your eligibility is higher. Too many enquiries in your credit report is a sure way to get your loan application rejected by lenders.
Check your credit report periodically
It is a good practice to check your credit report periodically. Check for details like loan closure etc are updated correctly. Some banks fail to update the bureau in which case it might show erroneously on your report thereby reflecting on your score. Get issues like this sorted by raising the issue with the bank and bureau and sorting it out immediately. Sometimes, loans and credit cards which you have never taken might also reflect in your credit report, in which case, it is best to highlight the issue to the bureau and get it resolved so that it doesn’t impact your score negatively.
CIBIL score of 700+ is usually considered good enough for getting your loan application approved. Follow some of these rules and you can see a positive impact on your score within a few months.